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Managing IT Through a Downturn

But this is human nature and there isn't much we can do to change it. Instead, enterprise network managers can prepare themselves, and they would be well served to look backward for guidance. It's been a long time since most have seen an economic recession. Sure we had a tech bubble burst in the early part of this decade, coupled with a short and mild recession. But one would have to go back to the early 1990's to find the last time the United States suffered a prolonged recession. That means that for many of the folks in the tech industry, a recession is just something they read about in business classes. It isn't something many of us have ever actually lived through.

The point of this article then isn't to do a deep dive into causes and outcomes of a recession, and truth be told, the real-estate mess that seems to be the root cause of the current concern is probably something we could write several books about (and I'm probably not making too bold of a prediction to suggest that several dozen are likely already being written). Still, there are impacts that IT managers need to understand, and vendors/service providers need to look at as they make their plans for 2008 and beyond.

ROI is King: In times of tight credit, slowing spending, and long-term gloominess, we can expect that enterprises will put the clamps on many spending projects. IT projects in particular will likely be viewed in one of two ways - those that bring value to the company by improving operations and/or lowering costs, and those that don't. It will be easier to sell IT spending on the promise of cost reduction than it will be to sell it on the promise of increased revenues. Therefore, IT managers should take a long and careful look at their 2008-2009 initiatives to look for those that can best contribute to helping their organization reduce overall spending in a slowing economy. They will need to pay careful attention to classic economic measurement criteria such as net present value and payback periods. They will need to be prepared to defend projects with hard, and verifiable cost data. Simply stating "we think this will help the company save money" is not going to lead to project approval.

Look For Opportunities Overseas: The world is much different than it was in the early 1990's. The U.S. is still the world's economic superpower, but growing markets in places such as Russia, China, and India may help offset any potential contraction here in the United States. Make sure your IT plans reflect the potential that markets outside of the United States may provide stronger growth than those within. Now is the time to revisit WAN contracts, support services, and collaboration capabilities to enable a stronger ability to conduct operations outside of the United States.

Be Bold: The "nobody ever gets fired for doing XXX" still works for many IT decisions, but in turbulent economic times the real answer might be "let's try YYY". Consider a second look at open source projects to potentially meet end-user application requirements while reducing licensing and acquisition costs. Look more strongly at approaches such as web services to reuse common software components while streamlining development.

Prepare for Reduced Travel Budgets: For organizations looking to cut costs, travel is usually one of the first things on the chopping block. But the reality of today's virtual organization and dispersed teams is that the need to communicate and collaborate across geographic boundaries is increasing. Now is the time to put together a strategy that includes leveraging tools such as video, web conferencing, document sharing, blogs, wikis, and instant messaging to improve the ability for groups to work together as in-person meetings become less frequent.

Don't panic: At least not yet. The 1990-91 recession lasted only three quarters, and hopefully rapid action by the Federal Reserve, along with a new wave of mortgage refinancing spurred by falling long-term interest rates may offer some hope for another mild downturn. But hope isn't a strategy, instead prepare yourself for the worst, but hope for the best.