IT Skills: To spend or not to spend in tough times?

With talk about a world-wide recession dominating financial discussions, budgets are not easily allocated or spent. What approach should you take towards IT spending? The usual knee-jerk response in a recession is to cut back or freeze IT spending. But is that necessarily the best strategy?

There is no single, definitive answer, but following are a few thoughts to mull over when you consider signing, or not, on the dotted line.

Think about the advertising industry. In difficult economic times, advertisers tend to cut back on ad spending, some dramatically so. But there are companies that don’t cut back. With their competitors lowering their advertising profiles and ducking for cover, these companies see it as an opportunity to grab market share and emerge ahead of the pack when the good economic times return. And more often than not, it’s a winning strategy.

In the same vein, there are professional investors who know that the time to buy is when other people are selling, and the time to sell is when other people are buying. This may seem like a counterintuitive approach, but it’s done wonders for the likes of Warren Buffet, America’s most successful investor. These are people who have consistently employed this approach, and it’s helped make many of them very, very rich.

Moving in the opposite direction of the crowd is not something that makes sense for every organisation, nor is it a guarantee of success. But it is something you ought to consider.

Here’s how IT can help you in tough times:

  • Invest in software solutions like business intelligence (BI) and business performance management (BPM) to make better, faster business decisions and squeeze more profit from your existing operations. 
  • Deploying collaboration and remote meeting solutions to reduce travel costs without sacrificing creativity and team synergy.
  • Hosted solutions and cloud computing with their vastly lower capital investment requirements can help you capitalize on cost-effective ways of helping your business become more efficient, while positioning it to emerge stronger and more profitable when the good economic times return.
     

 

There are other angles to work when the economy goes into recession. You can cut a better deal with software vendors in a recession, a time when they’re especially hungry for your business. With many companies, some undoubtedly your competitors, letting IT staff go, there’s an opportunity to scoop up some excellent talent that simply wouldn’t be available if the economy was good.

The bottom line is pretty clear: under-investing in IT can lead to poor customer service, lost business, and a lack of productivity – none of which is good for business.
Just because it’s so commonly done doesn’t make cutting or freezing IT spending in a recession the right course of action for you. In bad times as in good, there are opportunities waiting to be found. Assuming that your organisation’s circumstances don’t absolutely prevent it, you just have to be willing to buck the trends and find them.

Adapted from a blog by Larry Blitz.

 

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