As the U.S. and world economies struggle, I was asked to think about some lessons learned about managing through a downturn. The first thing that came to mind was an interview I’d given in February 2007, “How Lauth is growing IT with downsizing in mind.” Thanks to the internet, much to my chagrin, the article still exists. At the time, it raised eyebrows at my company. I fully realize how naive I was back then as a CIO with less than a year under my belt. I thought about titling this article “If I Knew Then What I Know Now.”
We were on the brink of the Great Recession from December 2007 to June 2009—a recession that shrank our almost 500 employees to a couple of dozen. This was a slump in which I had to lay off 29 of our 30 IT professionals, myself included (yes, I laid myself off!).
Grow with downsizing in mind.
The 2007 me was naive, but I still think we need to approach IT, and business in general, as an opportunity for growth while economizing in ways that make sound business sense. What are some of the lessons I learned that could help you navigate this downturn or the one after that? It comes down to minding your own business, becoming a rubber band and being in it for better and worse.
Mind your (own) business.
The first realization I learned from the Great Recession was that I didn’t know enough about our business or industry. As an IT leader charged with transforming a business’ technology and technology team, you need to learn more about a company than the P&L and balance sheet. You need to know how the business makes money. What are its value streams? How does it go to market? What customer problems are we solving and how?
For the IT leader, it’s also essential to understand how the business leadership views IT. Gartner analysts call it the “business continuity management” model. I describe it as a “volume dial” in my book Amplify Your Value. Do they see IT as a silo, process-based, an internal service company, shared services or a profit-generating department? If you’re on the silo/process-based end of the dial, your company will likely look to you to cut costs via staff reductions. However, if you’re a profit generator, you may look to technology to help drive efficiency, cut costs or even invest in opportunities to leverage during the downturn.
Become a rubber band.
For decades, scalability was one of the measures of exemplary IT implementation. Could it expand to meet the growing needs of the business? We used to accomplish this by overbuying capacity, growing up to it (and, in some cases, beyond) and then buying more capacity. This stair-step approach was good; at least IT wouldn’t be a limiter on the company’s growth.
The cloud gives us a new way to look at our systems; it allows us to expand and contract like a rubber band. We can expand when demand requires it, and when not, we can contract to reduce our spending.
When you think about it, this is also the promise of outsourcing. We could use resources when we needed them, and when we didn’t, we could release them. As you review your IT landscape, look for ways to make it elastic, either through consumption models such as those provided by the cloud, contract pricing models like “per employee per month” or strategic outsourcing of some of your services.
Be in it for better or worse.
Recently in Forbes, I described some benefits of forming a vendor partner ecosystem. The idea of creating a vendor partner ecosystem was a lesson learned from leading through the Great Recession. As we were going through the reductions in force needed for the company to survive, part of my job was to renegotiate the agreements with our hardware, software and service providers.
Our agreement with one of our software providers was based on “per employee per month” pricing. However, the deal had a floor. No matter how much our employee base shrunk, we still had to pay for the base level defined in the contract. We tried negotiating with the provider and even encouraged some of our partners to use their product. But they wouldn’t budge. A partner relationship was absent with this provider.
Enter our printer vendor. They were more than a printer vendor—they also managed our onsite print room, where we had high-volume printers and large-format prints. The contract was priced “per click” (a.k.a. per page printed). Except this agreement also contained a floor far above our new anticipated print volumes. When we reached out to this vendor, they treated us as partners. Their executive team, including their CFO, met with us. Over several hours, we hammered out a new agreement, giving us the price relief we needed and ensuring our relationship well into the future. We had a partner relationship with this organization.
Be prepared for the downturn.
Whether responding to today’s downturn or the one after, the key is to start now. Look across your business and find ways to learn more about it and your customers. Review your technology stack and uncover elasticity. Meet with your vendors and identify true partners. Taking those steps now can help you prepare for the future and position you well to leapfrog the competition when the economy recovers!
This article was originally published on Forbes.
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