Too often, IT departments attempt to simply keep the lights on when the business climate sours. Here is an argument for why that would be a mistake.

by Nancy Louisnord
Date Published February 13, 2023 - Last Updated February 16, 2023

faint glow of a bulbWhen news headlines and projections forecast an economic downturn, businesses have a natural tendency to cut costs and focus on doing the minimum necessary to keep the lights on. As a result, companies postpone or change the course of planned projects, and there is enormous pressure on each department within the organization, including IT, to quickly create value and contribute to the bottom line. However, history has shown that recessions don’t last forever, and at some point the tide will turn. At that point, you have to be ready to thrive and accelerate without any roadblocks.

In the current climate of economic uncertainty, there are a few considerations for IT leaders to consider:

Striking the Balance between Cost Cutting and Investing

At first thought, cutting costs and going into defense mode seems the best way forward during an economic recession. For IT departments, this entails either postponing projects or changing course to minimize costs.

However, that may not be the best course of action. According to a study by HBR: “Firms that cut costs faster and deeper than rivals don’t necessarily flourish. They have the lowest probability—21%—of pulling ahead of the competition when times get better, according to our study. According to our research, companies that master the delicate balance between cutting costs to survive today and investing to grow tomorrow do well after a recession.”

How do you strike the delicate balance between cutting costs and investing when every cent matters?

One strategy is to steer towards a “good enough” solution for the project you are trying to accomplish rather than continuing to utilize niche software providers and solutions. With cost reduction in mind, going for an all-in-one solution certainly saves money in the short term, but with the high risk of a failed project or incorrect migration initiative, are you sure that an all-in-one solution will be good enough?

You may find that an all-in-one solution might do what is needed right now, but when the recession fades, you may end up losing precious time because you have to redo major projects. This all results in lost momentum and growth, effectively giving up your competitive advantage.

With that in mind, you must evaluate the long-term impacts of a short-term solution. Although some projects may need to be postponed, those that will bring long-term value should be executed with the same attention to detail and precision, even if that means investing in niche software vendors versus an all-in-one solution.

Avoid Unnecessary Uncertainty

While you can postpone some projects, some simply cannot wait. For example, you cannot just postpone compliance-related projects. Compliance does not wait on anyone, and you may risk costly fines.

In an already turbulent, unpredictable economy, you do not want to add to the uncertainty and unpredictability, or risk any additional unforeseen expenses, such as fines for non-compliance. One of the simplest ways to avoid this type of uncertainty is by taking a lineage-first approach to your compliance projects.

It’s often the simplest approach that is ignored: we spend so much time thinking about the way the data in our systems is being used that we don’t think about the path it took to get there, whether it is accurate and complete, any dependencies between data points, or whether it follows guidelines regarding data in any given country. By putting data lineage in the front of any given decision, leaders can more easily map out dependencies, compliance issues, and the possible results of any changes before they can impact the greater organization.

Continue Investing in Cloud Migrations

According to Harvard Business Review: “The benefits of a well-thought-out digital strategy are well documented: improved visibility of resources and better resource management, enhanced flexibility and organization agility, lower costs, smoother supply chain management, better customer experience, improved productivity, faster product development, and superior human resource planning.” In other words, now is not the time to pause or slow down your digital transformation efforts – it’s the time to accelerate them.

One impactful way to accelerate your digital transformation efforts is to continue with cloud migration projects. Eliminating legacy technology lowers your costs of infrastructure and support overall. However, it’s estimated by McKinsey that approximately $100 billion of cloud funding is expected to be wasted over the next three years—and most enterprises cite the costs around migration as a major inhibitor to adopting the cloud.

The process is so complex (and expensive) because every system consists of thousands or millions of interconnected parts, and it is impossible to migrate everything in a single step. This leads many organizations to cut corners when it comes to cloud migration, which only furthers the idea that cloud migrations are a costly waste. However, if you do it right, you can avoid unnecessary uncertainty as technology changes.

The big question is how? Using data lineage during a migration project will help guide you to understand what you need to migrate, when it’s time to switch off your legacy tech stack, and how to avoid incidents during the migration (a huge win for support teams and change managers).

Put Innovation Front and Center

At its core, digital transformation goes beyond cloud migrations and digitization. (Think of all the possibilities AI is bringing us!) Although the finance department may push for cost reductions, it is IT’s role to point out those initiatives that will be the jet engine of post-recession growth and make sure these will continue to be funded.

Headshot of Nancy Louisnord Focus on innovation through predictive and autonomous digital projects as they make your organization leaner, reducing operational costs for the long term. When the economy is back at a tipping point, these costs will remain low, allowing your profits to grow faster.

Looking Forward

During COVID, we saw IT help companies survive through their agility to pivot business models through digitalization. When companies needed a swift change to remote work, IT made it happen, creating value that went beyond the monetary impact for many organizations. Now, let’s make sure IT does not fall back into the pitfall of the “keeping the lights on” mentality. Though cost reduction will be inevitable in some areas of business, IT is also the best place to invest in certain initiatives for the business to thrive.

Nancy Louisnord is the Global Chief Marketing Officer of MANTA, responsible for the company’s global marketing programs and product marketing strategy. With more than 15 years of international leadership experience in the B2B IT SaaS industry, she is a sought-after presenter at conferences and one of HDI’s TOP 25 Thought Leaders and HDI’s featured contributors. MANTA offers a comprehensive data lineage platform that gives companies complete visibility and control of their data pipeline. Manta has helped companies reduce incidents through proactive risk analysis, accelerate digital transformation, and enhance governance by building trust in data.

Tag(s): supportworld, business continuity planning, best practice


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