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If We're Entering a Recession, Preparedness is Key

If We're Entering a Recession, Preparedness is Key

Preparing for a fight

1. Get your numbers in order Consider what's important during a downturn and line your KPIs up behind that. "The fact that you have met your service levels and kept the network up and running isn't enough," says Gartner's Gomolski.

Gomolski suggests that overall IT budgets split into three main areas: what's required to keep the lights on; what's required to grow your business; and what's needed to transform it, with the average ratio something like: 66 per cent; 20 per cent; and 14 per cent.

"I see lots of IT budgets divided up in standard fashion, apportioned between hardware, software, maintenance and so on," she adds. "And people say to me: 'Where should we cut?' And I say: 'I don't know.' The traditional way of presenting IT budgets just doesn't give you information that's deep enough to say with certainty."

Operating in the dark, too many CIOs will acquiesce to the recessionary logic of cut-and-come-again. "CEOs who lump in lights-on expenditure with discretionary spend can end up inhibiting the growth of a company," says Gomolski.

2. Go from partner to service provider It's worth trying to avoid the scenario in which a CEO orders 10 per cent cuts across all budget lines.

"I think a CIO can get chewed to bits in an argument like that," says Brinley Platts of CIO Development. "No-one's interested in the truth. They're just interested in everyone sharing the pain." Cuts in the 60-70 per cent of expenditure routinely spent on running the business can be difficult to implement. "Out of a total budget of, say, £100 million, perhaps £25 million is discretionary. And £10 million out of £25 million is massive," he says.

Changing the way you work with business units may help. Platts suggests that you should stop acting like a "partner" and start acting like a "service provider". If the £10 million you're being asked to cut is nearly all project money, he suggests asking the line-of-business sponsors of those projects about what they need to achieve. "Go around the table asking about priorities," says Platts. "That's quite a good tactic, and I've seen it work several times."

3. Rigorously evaluate your software estate and cut accordingly As IT leader at ICI between 1993 and 1999, Richard Sykes had the good fortune to experience six years of uninterrupted GDP growth. But he also oversaw preparations for the demerger of what became Astra Zeneca, the pharmaceuticals business, from ICI's core chemicals operation.

The demerger was a forcing house for economies. One of Sykes' first initiatives was an end-to-end evaluation of every piece of software under ICI's roof. "After the audit, one-third of all software code, a staggering amount, bit the dust," he says.

Today, Sykes would recommend the same exercise to anyone. "There tends to be a tremendous accumulation of systems," says Sykes. "Even if you're not paying licence fees on them, they're taking up computing capacity and they have a cost in terms of maintenance."

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