Archive for December, 2008

Information Technology and the Economic Downturn

I am writing this blog while on an airplane to Texas. As I often do when I travel, I bought a copy of The Economist in the airport and plan on reading the magazine cover-to-cover during the flight. As one might expect given today’s economic environment, a central theme of the issue I hold in my hands is the global economic downturn and the pending impact on industry and society.

The words in the magazine lead me to reflect about the upcoming challenges for IT and, since I am generally an optimist, I also wonder about what opportunities we have for utilizing information technologies to some of ease the negative impacts of the global economic downturn.

In a broad sense IT can either be run (or perceived) as a cost centre or an innovation centre. If IT is a cost centre then the organizational focus will be on determining how to reduce the current IT spending. If IT is an innovation centre then we should be contemplating investments in projects that identify (and implement) ways to streamline business processes to reduce costs, improve services, or enter new markets.

Clearly IT will need to find ways to reduce current IT expenditures to assist with balancing the books. IT will need to restructure and reduce costs. But just making our share of cuts and waiting for this fiscal unpleasantness to pass would be, in my opinion, missing an opportunity. I think now, more than ever, we need to find ways to use IT to ensure we use our scarce resources to get maximum value.

The economic situation has brought with it a sense of crisis (or potential pending crisis) in many organizations. This can be a significant catalyst for change. We are likely entering a period of time where organizations will be willing to more critically examine past business practices and approaches to drive out costs and improve services.

However, in these economic times it may be difficult for organizations to invest in large IT projects. Capital will be scarce. Any large project risks will be difficult to justify. So instead of envisioning large monolithic projects that have positive but perhaps a rather long-term return to the organization, I think we need to rely on a more incremental approach.

Big vision, small steps. And each step must provide distinct value to the organization.

Incrementalism can be a sound philosophical approach even in good times and certainly a good practical approach when times are tougher. However, sometimes I feel some people would really rather talk about the big wins.

In these tough economic times our challenge in IT will be to convince people that a lot of aligned smaller wins are more likely and more valuable than that one big project. No matter how exciting that big project may be!

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