Five Lessons for IT Leadership
Smart Strategies in a Turbulent Economy
by Adam Stafford, August 2009
Turbulent markets, corporate downsizing, and tight capital budgets: the economy is rough, but it won’t be that way forever. Those who will be most successful coming out of the current cycle are the visionary IT leaders who are busy today ensuring that their companies emerge stronger tomorrow when the economic upturn begins. How? By using lessons learned in past down cycles to position their organizations for success. Those leaders are asking, “What did we learn back then that can be applied to our decisions today, to ensure we best position our companies, our organizations, and our people for the future?” Here are five ways IT leaders are making that happen.
1. Think Outside-In
How is your company perceived by its customers? Why do people choose to do business with you, rather than with the competition? What makes your company unique? How can you keep a competitive edge? The answers to these questions help companies align organizational priorities across business units and invest in the areas most relevant to improving the business.
“In difficult economic times, you must retain your key customers to keep your revenue stream up,” says Cliff Godwin, senior vice president of Applications Development at Oracle. “Where IT can help is by bringing your attention to areas where, for a relatively contained investment—and a fast return on that investment—you have opportunities for customer development and superior business insight that will ensure you stay ahead of the competition.”
How an IT department allocates resources depends on business impact, value, and ROI. A top business requirement from one group may have a slower rate of return and consume more up-front resources than another department’s project, but its total value to the organization may be greater over time. Assessing business requirements holistically and identifying direct costs, opportunity costs, and business value associated with each group’s top needs is critical in developing a sequencing strategy that balances a value-based return to the business.
“An economic downturn forces you to prioritize and focus on what’s really critical,” explains Godwin. “It also offers opportunities for businesses whose competitive landscape is changing. The IT organization can provide the data that will help companies understand what’s happening and react swiftly to better serve customers and improve margins.” The following four exercises can reshape your perception of your business and help you allocate scarce resources more strategically:
- First, redefine what innovation means to your organization so that it encompasses more than just “what’s new.” Eliminating something that doesn’t work—whether it’s a business process, a partner, or a piece of technology—is just as innovative, and it saves you money.
- Second, evaluate your company against your competitors in a rigorous organizational benchmarking exercise. Reviewing the business overview and risk management areas of competitors’ annual reports—and comparing the information to your own—can spark valuable new ideas.
- Third, do a “green field” exercise, inviting your IT leadership to muse on what they would do if they had just bought the company and could do just three things to improve the business.
- Fourth, learn where your strategic technology partners are focusing their efforts. Where are they spending their R&D dollars? What trends are they projecting? And what can you do to help your organization prepare for where your vendors are likely to be going?
2. Use What You Own
When business is roaring and IT is racing to keep up, it’s often hard to take a breath and analyze your current technology environment. Today’s economic situation offers an opportunity to take a step back and conduct a comprehensive audit and analysis of your systems portfolio. This analysis becomes the foundation for designing a strategy to better leverage the solutions your company already owns. In the process, you’re likely to uncover areas of opportunity, where there are untapped capabilities for adding value to your business, with little or no added capital expense.
“Obviously, budgets are strained nowadays,” says Godwin. “Your IT organization can shed light on where you can reduce costs by simplifying and standardizing your technology landscape. Oftentimes, companies who have been through mergers or reorganization find that they have a lot of duplication.”
An audit of your existing technology portfolio starts with some very simple questions:
- What systems and technology solutions are we using across the enterprise?
- Which modules are we licensed for in each application, and what version?
- What products did we inherit with our recent acquisition?
- Are our business users utilizing the full capabilities the software offers?
The last question is particularly illuminating. If users are not taking advantage of software functionality, then your business processes, system configurations, and technical setups aren’t maximizing your IT technologies. And you’re not getting the full value from your investment. Collaborating with your strategic technology solutions partners can give you insight into how to improve.