Whenever they hear the word “recession”, the first thing most organisations do is adopt a siege mentality; stop all expenditure deemed “non-essential” and hunker down for a long winter. It’s like a human body, when faced with exposure to a sub-zero climate, it automatically cuts off the blood supply to peripheral vessels in order to preserve core temperature. Sadly, if left too long, this often results in frost-bite at the extremities and in advanced cases – amputation, causing great harm and long term debilitation to the body as a whole.
As it is in life, so it is with IT. We’ve lost count of the times we’ve seen major IT initiatives cut off in their prime, despite already being committed to expenditure, because the economic wind has changed direction. A classic example in our experience was when a major global automotive manufacturer, sensing a down-turn in its profits, cancelled the development of a new product definition system that would demonstrably have saved it millions, preferring instead, to soldier on with a raft of legacy systems, the longer term costs of which would swamp any short term saving made by the cancellation.
This kind of reaction is common and can result from many individual factors but, at the very least, it suggests two basic truths. Firstly, that the organisation has failed to understand the fundamental relationship between its IT and the business it’s supposed to support. Secondly, that there is no objective mechanism for the business to link IT activities with strategic business goals or benefits – making it possible to cut the blood supply to organs that will be needed later.
The first point is well understood. Despite indignant protests to the contrary, most business people still see IT as a necessary but largely incomprehensible cost. That’s why so many periodically attempt to outsource the ‘problem’ only to find themselves with a new kind of management headache. Of course, they should regard IT as a premiere resource in their ability to ride the storm and emerge smiling into the new sunlit dawn, but this requires consideration of the second point.
How many organisations can truly claim to be able to measure the contribution of the IT department, and its portfolio of activities, to the achievement of strategic goals and benefits? In our experience very few can do this convincingly. Without this ability, how do you know with confidence which activities to cut and which to invest in, when the going gets really tough? All too often. these decisions amount to little more than the outcome of a set of competing short term special interests. In a recession, a time when rapid adaptive change is a given, it’s especially necessary that the real contribution of the IT department to the realisation of the business’s goals is comprehensively and objectively understood. Unfortunately there remains a lamentable lack of the means by which CIOs can accomplish this.
The first thing the CIO should do in times of business stress is engage with the business leaders within the organisation to construct a mutually comprehensible framework for change. The framework should spell out exactly what is to be measured about IT service provision, and demonstrate how this is linked directly to the strategic concerns of the business. In the same terms, it should also be capable of specifying what IT service provision should look like in the future, when the storm clouds have dispersed, and point to the quantifiable business benefits of making that change.
When CIOs and business leaders begin to create such mutual frameworks, maybe recession-induced frostbite, and amputation, will become as rare as smallpox.