With an economic slowdown all but inevitable, recession is top of mind for most business leaders. If it happens in the near term, it will be a financial cycle like none other.
“We have record low unemployment, with record high inflation. We have prices for technology and services higher than any CIO, IT leader, or business owner has to deal with,” says Ryan Prindiville, partner-in-charge of consulting at accounting and business consulting firm Armanino. “At the same time, businesses are coming off of record growth over the last couple of years. So you have a dichotomy that business leaders, forecasters, and prognosticators have never seen before.”
Cost cutting ahead of recession is conventional wisdom — and there are certainly some targets for reduction that would have limited negative impact on the business. “But better wisdom is to take the opportunities to accelerate investments to improve efficiency long term,” says Rick Pastore, senior research director and IT advisor at The Hackett Group.
CIOs may want to invest, for example, in migrating systems to the cloud because you want the ability to scale up or down in a recession. “There may be investments that IT leaders and CIOs need to make now to withstand and sustain a prolonged downturn,” agrees Prindiville.
These ventures aren’t necessarily short-term fixes. “IT leaders ought to be planning for a more flexible environment over time, but these are three to six months exercises,” explains Michael Fuller, principal at The Hackett Group. “The goal is to think about how they might change the technology organizations holistically and consistently, making sure those investments are leaning out the base and creating flexibility.”
To get ahead of the pending economic outlook, IT leaders should consider making investments in the following areas, especially where such shifts can reap long-term operational benefits, recession or not.
Enabling better insight into costs and value
“IT leaders should maintain a deep understanding of their cost structure as well as the value that the IT services and investments provide to the organization as a whole,” says Patrick Anderson, director of technology, strategy, and architecture at global consulting firm Protiviti.
If you don’t already have this transparency and clarity, now is the time to invest in creating it, as doing so will enable you to make intelligent moves to free up costs or support additional investments.
Knowing how each aspect of the IT infrastructure supports the business is also critical. “In most organizations, this information is tribal knowledge and is not easy to access or action,” Anderson says.
Going cloud native
Boomi recently made the transition to a cloud-centric stack with investments in …….