It may seem as though this recession will never end, but it will. All others have; it’s just a matter of when. Over the past many months, CIOs have been responding to the economic downturn. Projects have stopped, consultants have been terminated, staffs have been adjusted and IT services have been curtailed, with intent to become leaner as sales have slumped. This difficult and ongoing exercise has been particularly challenging when so much IT spend is fixed and non-discretionary.
Over the past several months, we’ve begun to see improvements. The stock market is up and home buying, home building and automobile purchasing have improved from the beginning of the year. However, unemployment continues to increase (9.5% nationally), although at a slower pace, fueled now by automobile factory and dealer closings and the impending trickle effect. We’re in a see-saw, “good news, bad news” economy where ultimately good news will take center stage.
The big questions for CIOs are when and how to prepare for his/her company’s business to pull out of the recession? Should we wait a bit longer, especially since most prognostications have been that this recession will not be over quickly? Should we continue to hunker down and focus on “lean”, on austerity, not growth? It’s a lot like knowing when to get back into the stock market (if you got out). How long should we wait?
Plan Now for Recovery
Regardless of the timing of recovery now is the time to begin a parallel path. Just as we may have developed various budget scenarios depending on the severity of the recession in our own businesses, preparing alternate recovery scenarios for the future makes sense. We’ve adjusted our IT operations to be very lean. What do we need to do to retain appropriate fiscal insight and efficiencies, but meet the business growth needs as well?
In this paper, I will describe 10 considerations for CIOs as they work with their business function counterparts on business recovery scenarios. IT needs to evaluate the impact of these business scenarios, not just from a budget standpoint, but also from a process and “better practice” standpoint. These ten points help you understand how you can take advantage of the downturn in the economy to be in much better shape as the economy recovers.
10 Tenants For Recovery Planning
1.) Review vendor contractual terms for extensions, particularly pricing, while the prices are low and it’s a buyers market. Your vendors are more willing to negotiate now because their revenue stream has been affected by the economy. I’ve heard consulting rate reductions as much as 25%. To be most effective in negotiations, you need to understand the financial situation of the vendor. Gather information through public sources and personal contacts on what the vendor is offering other companies and what the vendor’s competition is doing. Create a compelling story for rate and other favorable terms (e.g. higher tier service levels for the same money). If the negotiated rates and other terms are likely to go up in the future (particularly people costs and likely not hardware costs), extend the contract for as long as is reasonable for your company. This certainly depends on the viability of your company. For example, with outsourced programming assistance, you may want to lock in lower rates for another 2-3 years. Extending the contract should be seen as an advantage to the vendor as well, so this “win for the vendor” is a further negotiating

You do not have flash or javascript support.

Average (2 votes)

Reply