May 28, 2009

Have you shifted IT's attention from fighting the crisis to getting the most from the recovery???

Well we have arrived...... at least in Israel......
even... Goldman Sachs... agrees with me (look here)

Last week we saw real EBITE growth in most sectors of the Israeli Economy another useful indication that the economy is turning around.
We have bottomed (scared to put statistics but look below);
now we have to do something (look here)

We (IT) are critical in the management's team thinking and planning for the recovery (it really doesn't matter if it will be 4Q2009 or 2Q2010). IT has to start planning and doing NOW.

There are risks because we dont know if the recovery will be fast (during 2010) or it will take couple of years. This are risks that IT has to take. The reason is simple: no company can afford to take the chance of NOT being ready with new products and services when the "race" begins.

There is an excelent research by McKinsey that shows winners (coming out of recessions) and what they did. I would like to quote some of it:

-"Some companies emerge from a recession stronger and more highly valued than they were before the economy soured. By making strategic choices that sometimes defy conventional wisdom, they increase their stock market valuations relative to those of their former peers and thus gain more power to shape their industries"-

This is what successful companies did during the recession:

1.- Maintained a greater appetite for acquisitions .
2.- Were not afraid to spend their cash reserves in a recession
3.- Traded lower short-term profitability for long-term gain, refocused rather than cut spending.
4.- Spent significantly more on selling, general, and administrative (SG&A) costs .
5.-Seeked to extend their position through innovation, more than doubled their already higher-than-average level of spending on R&D.
6.-Expenditures on advertising grew (as a percentage of sales).

Well, we are not out of the recession, and I am not recommending companies to run out and spend on IT; but now IS THE TIME to decide on recovery strategies and to implement them.

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