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.

Why this is the time to grow and invest in your business

I know this are hard times and most consultants and economists say "wait we haven't hit bottom yet", "indexes are fluctuating an average of 20% each month", "dont spend the cash needed for a long downturn" and worst of all they are still talking about cutting costs in IT.

Today investments in IT capital projects and IT talent are cheap ; best talent and products at the lowest prices since 2002.

I am very surprised that the financial press has not learned anything from past recessions. Always during the last third of the recession we can see which companies are going to excel. The companies that showed "profits" only by cutting costs will find themselves losing market share. Companies that maybe sacrificed profits but grew in revenues and also revisited their marketing and product strategies will be winners when everything quiets down.

This is the time to invest in R&D, new business processes, new strategy and yes even aggressive marketing.

What all this has in common? IT projects

-"History also suggests some possible indicators of the beginning of a recovery. In three of the four most recent recessions, ...... IT spending led the way"- The McKinsey Quarterly

Cycles for IT projects >> 10 to 18 months . Why not start when everything is slow, cheap and with excellent talent? Best of all be ready when the economy starts rebounding.

To all my clients ( IT vendors and CIOs) I recommend using summer 2009 as a strategic jumping board. This is the time when you will make a difference.

CIOs: time to start new initiatives like self service, mobile, new business processes, enterprise risk management and yes a more efficient data center.

Vendor CEOs: time to invest in new products, sales training and marketing.

One thing is important START & KEEP MOVING dont get hit by the MOVING COMPETITORS.

What is happening? Part 3

status quoLet’s look into IT procurement “best practices” in a recession (not a complete list and based on STKI Round Tables and meetings):

1)       The IT procurement organization has a responsibility to keep vendors aware of corporate objectives and strategies. This will keep vendors focused on how they can help fulfill business goals.

a.       Use Web2 technologies (blogs, etc) to create IT procurement transparency. Explain buying decisions and mandates through social systems.

2)      Question the status quo.

a.       Is the procurement process matched to the new economic realities?

b.      Are current replacement plans necessary? Can we move them back? Delay deployment plans of unpopular systems like Vista.

c.       Don't let blind cost cutting destroy relationships, quality or compliance standards.

d.      Look to buy new tools that will improve monitoring of contract compliance and service level agreements.  EXAMPLE: PPM project portfolio management as a gatekeeper that prevents overspending.

e.       Cut the weak, superfluous vendors that were hanging on in good times.

f.        Don't just cut -- be ready to invest. Be prepared for acquisitions and the upturn. Don't rule out a relationship with an amazing new vendor.

g.       Everyone thinks they are good negotiators -- they're not.

h.      Move from long-term contracts to short-term. This will lower risk.

3)      Software licensing issues:

a.       Stop constant, unnecessary upgrades.

b.      Cut maintenance contracts on mature or non-critical software. Take the risk and lower cost.

c.       Cut back on software proliferation -- use these times to create fewer, stronger standards and rationalize licenses.

d.      Re-negotiate perpetual licenses, if needed (although some have better value than new contracts).