Rod Sweet presents the indispensable guide to surviving an economic
recession with your career intact
Your Big Break? Recession, slowdown, slump - whatever you
call it, tough times cause stress. Like everyone else, IT directors
fear their departments, their projects and even their own jobs are
on the block. But one school of thought says economic downturn is a
blessing if you want to make your mark in IT. That's because it
provides a beautiful opportunity to capture the board's attention
with sensible, value-adding and strategic initiatives.
David Taylor, president of IT director interest group Certus,
pooh-poohs the idea that recession, real or imagined, has anything
whatsoever to do with the career of an IT director. "IT directors
should be creating their own agenda, recession or not," he says.
"They should be acting as board members even if they're not."
Okay, that's nice as a general rule, but what, specifically, should
IT directors be doing when the board is jittery about costs and IT
comes under the microscope?
Taylor advises IT directors to make a pre-emptive strike. "Send an
email to the CEO today. Tell him IT needs careful consideration and
that you'd like to discuss your plans for getting more value out of
your investments. IT directors should never retreat into their
shell.
They've got to say the right things to the right people, play
politics. Don't play their game. Play your own game."
Retreating into shells is something author and consultant Al Dunn
saw a lot during the last recession, in the early 1990s. He says it
can be fatal for the business.
"People stop communicating," he says. "They stop taking decisions.
They fear for their jobs and their pensions and do everything they
can to make sure it's the next guy who gets blamed." The result is
that barriers solidify between functional units within a business
and the customer suffers.
Finally, don't be afraid to close your office door for peace and
quiet. Economic downturn may give you the feeling that you ought to
be running around. Not so, says Andy Chestnutt, head of consulting
services at Compass Management Consulting. In a slowdown, a
business naturally takes stock of what it does best and how it
differs in the market. That's a good time for an IT director to be
thinking strategically and fitting IT into these renewed goals of
the business.
"It's a great time to work for an empty in-tray and an empty
whiteboard," says Chestnutt.
But you'd better come up with good ideas, warns Dunn. "The board is
going to be looking at the IT department and wondering what it can
get rid of. So IT had better know why it's there and where it's
going. If an IT director thinks their activities are safe because
the cost of switching to other ways of doing things are too high,
they may be in for a surprise."
Radicalise Customer Relationships
Use an extranet or
virtual private network to connect with customers. It doesn't have
to be a massive project. It took only four days for Stuart Allsopp,
special projects manager at Access Accounting, to design an
extranet to automate transactions between the software house and
its resellers. Development time overall was two months. Now, 95% of
orders are processed through this system. Resellers like it because
it's quick, and Access Accounting didn't have to hire an extra data
input clerk when sales grew.
Recession makes customer service more important than ever, but IT
directors should resist big, expensive CRM software installations.
They don't work unless the organisation has a customer-oriented
culture anyway. And the single biggest killer of such a culture is
the "silo" phenomenon, where departments don't talk to each other.
Back in the 1991 recession Dunn made the IT director of an airline
sit next to a check-in girl for a day to witness her misery as she
navigated through the awkward system on her terminal. The IT
director was sufficiently motivated to go back and redesign the
system.
Dunn believes companies should be so intelligently responsive that
no matter where contact is made with the customer, there is an
instant rallying round to support the interaction. And he insists
this isn't just guru-blather. "Until not so long ago, banks didn't
even know they had customers," he says. "They thought they had
accounts!"
Smarter ProjectsThink harder
One of the smartest things for an IT director to do in a recession
is to change what they think about, according to Mark Lycett,
lecturer in interactive systems at Brunel University. He believes
it's better to focus more on understanding problems than on
developing solutions. It takes more time but it's worth it, he
says, because it prevents systems becoming too complex for anyone's
good.
National Power is a good example. A Brunel team studied the utility
after privatisation to find out how well key systems, such as
decision
support, parts ordering and financials, met their users' needs. The
team found that users were extracting data from the systems, and
then using easier tools like Excel to manipulate the information
before putting it back in the system. Lycett says such workarounds
are common and show that systems are out-of-date, hard to use and
too much hassle to change.
In addition, Brunel's research suggests that 80% of system
maintenance costs go in system evolution - in other words, tweaking
systems to cope with changing business needs. That's a lot of money
because 60-80% of the entire IT spend goes on maintenance.
The answer is to create simpler, more elegant systems in the first
place, although you can't do that if you're under pressure to buy
off-the-shelf after a few briefings with the business unit needing
the fix.
"Too few people think about what CRM means for their particular
business before rushing to implement a system," says Lycett. "Then
a whole series of difficulties arise." He suggest three ways to
ensure a problem-understanding approach:
- Be Socratic. Socrates irritated just about everybody in ancient
Athens by his relentless questioning. IT directors should similarly
risk their popularity by being just as inquisitive about why a
system is needed, what it is meant to accomplish, etc
- Adopt the sponsor's perspective. Get inside the business unit
that wants the solution. View it as a business problem, not a
technology problem
- Learn from history. Meditate on the complex and bulky systems
you may already have
The real solution, though, is to think. "Methodology is no
substitute for intelligent thinking," says Lycett.
Buy a technology company Or take a stake in one. Does your
company rely heavily on a certain type of software? Are you being
held to ransom by your suppliers? Don't throw people, money and
time at developing in-house. The answer may be to take a
controlling interest in a company that can provide the technology.
That way you ensure the software develops to meet your changing
needs and, if the company is profitable, you've secured another
revenue stream.
Big companies do it. Deutsche Bank has interests in 15 smaller
companies whose products or services it uses. And Reuters has made
80 investments in the last five years.
Mind you, Reuters has a dedicated Greenhouse Fund, and your company
may not. But smaller companies can embark on strategic ventures
too. A good example is DCA Distribution, based in Abingdon, which
bought a 50% stake in a small software house, Lambda Business
Systems. Lambda's warehouse management system modernised DCA's
operations enough to pull it out of the doldrums. With such
dedicated technical expertise on tap, DCA was able to accomplish
more than a company its size could normally do, such as use the
same system for its Russian operations, but with Cyrillic
script.
Conclusion
B&T doubts whether there will be a
recession - our readers tell us that IT spending has not dropped as
a result of the economic jitters spreading from the other side of
the Atlantic. But think of the fear of recession as a fire drill,
good practice for making IT fit in so well that in lean times the
accountants' baleful gaze passes right over.
Recession? What Recession?
Recessions may be as sure a
thing as death and taxes but we're not heading for one yet, says
Michael Hume, an economist for Deutsche Bank.
He's looked at the last UK recession and believes the underlying
factors are not comparable. For instance, in 1991-92, interest
rates were rising to combat high inflation; today, inflation is
under control and interest rates are low, with still more room to
drop. Here are five more facts that led him to conclude that the
recession cycle hasn't swung round again - yet:
1 It's not as bad as you think - in the US, GDP grew by 2%
in the first quarter of this year, double the prediction of most
analysts
2 Any slowdown in the UK is being caused not so
much by ingrained problems but by one-off catastrophes, such as
foot-and-mouth disease, the rail crisis, and floods
3 The
labour market is tight, and wages are growing at over 5%
4
Asset prices, such as stocks and property, continue to rise
5 Government spending is plentiful and taxation is low. Tax
cuts and spending hikes amount to about 1% of GDP, or £10bn
Triple Whammies: Your Three Smartest Moves & What Your FD
Wants to Hear
1 Have your IT manager join the sales team in making
presentations to key customers and talk about their exciting
projects. Properly managed, this will enhance corporate credibility
at very low cost
2 Convert a legacy application that is currently running on
an expensive outsourced platform so that it will run on the
up-to-date in-house platform
3 Identify key performance indicators for the organisation
and set up trigger alerts if any move outside their parameters in
any 24-hour period
1 "Projects I'd love to support deliver payback within the
year."
Tony Nash, FD, Lloyds TSB Development Capital2 "Try to be good at articulating the outputs: you've got to
be clear about the benefits."
Barbara Richmond, FD, Croda
International3 "Canvass opinion from others in the company - like the FD
- about the wider impact of IT spending. There are often benefits
beyond what the IT people can see."
Ian Little, FD, Access
Accounting