Posts Tagged ‘ economy ’

CIOs and Groundhogs

Today is Groundhog Day and across North America people are looking to these rodents to tell us how much longer we will have to endure (or enjoy) winter. Apparently most, if not all, of the celebrity Groundhogs saw their shadows and hence we will have another six weeks of winter.

But did your CIO see his/her shadow today? And as a result are there IT budget freezes over the next six months?  

There are mixed messages about the economy. On a positive note, last week the New York Times reported that the UK is exiting recession (http://tinyurl.com/) and today the CEO of UPS declared the recession over (http://tinyurl.com/yhg5rwf). On a negative note, the UK economy shrank by nearly 5% last year and UPS is looking to cut another 1800 positions this year. I’d label this an optimistic outlook but with still some very bad weather ahead. The climate of the IT budget will likely depend on the industry, but it seems unlikely that IT spending will recover in 2010.

In this difficult fiscal environment business is increasingly looking to IT to help cut costs. Not just IT costs within IT, but cutting costs across the enterprise. Yet capital for IT projects tends to be in short supply. And very few organizations are willing to wait months or years for a return on investment.

Fortunately “new” technologies and approaches such as virtualization, social media, and cloud-based services are available. These can be implemented relatively quickly at a relatively low cost. But understanding and installing the “technology” is the easy part.

I think the key challenge for CIOs in 2010 will be to guide their organization into the new environment. No longer can they afford the long lead-times for decisions, inflexible project management and large up-front investment that are the trademark of many IT projects. They need to develop strategy, governance, project management and service management approaches that provide the agility and flexibility inherent in the new cloud paradigm.

So while we are seeing shadows and realizing that we will need to endure frosty budgets for a while, it is time leave the comfort of the den and build (or rebuild) an IT organization that can work in this new IT environment. We have a lot of work to do.

Happy Groundhog Day!

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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!