Yes, we know everyone had a great New Years party. We saw the ball drop from Big Apple, watched celebrations all over the globe, and optimistically made the same old New Year resolutions again. But what about the resolution for your industry and the global economy in general? What does the dawn of 2009 have for your industry? Let’s evaluate some of the events which will mold the fortune of many organizations in 2009.
As the sun was setting for 2008, I remembered the highlights of 2008 and wondered what 2009 will bring for our economy, especially for IT. The year 2008 was the year to remember with many things that will mold the economic forecast for 2009:
As we know, with any challenges or threats there come opportunities, so we should consider the negative economic effect of 2008 as excellent opportunity to make the best out of it. It’s never too late to make a pledge for positive change, especially when it comes to improving your business position. Here are few important ones:
Mergers & Acquisitions
Historically M&A usually increased in uncertain economies and 2009 will not be different. We have already seen some huge mergers in airline industry (Delta – NWA) and technology industry (EDS – HP). M&A bring insecurity for employees and hesitation in consumers. But when these mergers happen, they open doors to many opportunities for the IT industry, because organizations need to synchronize their business models, research and development (R&D), IT infrastructure, networks, hardware, etc. to benefit from the M&A. Technology Evaluation Centers can help organizations with these decisions through its decision support system. TEC’s structured methodology helps organization to narrow down the solutions of a complex selection project to only those that match the organization’s business model, priorities, and objectives.
Out of the Box Approaches
The other positive aspect of the troubled economy is that it allows organizations to do things more creatively. Companies should plan for the long term and strategically direct their investments in exploring new technologies (telecom, mobile technology, open source) or build software applications for different areas (health sciences, energy, marketing, sales, software as a service [SAAS]) where there are huge opportunities for growth.
All R&D projects require investment, but when on-hand working capital is minimal, organizations have to use proper tools to evaluate opportunities and risks based on firm information. Using real options rationally when managing new development projects will assist in determining the value new innovations or services may bring to the organization. A model for real options management and value helps management with the decision-making process of whether to invest in product innovation, continue with it, or to abandon it. This method helps when adapting to new situations and opportunities as they arise.
Re-evaluate outsourcing and strategic hiring
On the other hand a slightly conservative approach can also help you sail through economic hardship. Companies should also consider evaluating their internal processes and downsize for a better outcome. There are many cost cutting strategies, such as outsourcing, offshoring, partnering, etc. With the US dollar growing stronger every day offshoring may be a good option. If you already have a long term outsourcing contract, you may need to re-evaluate your need and renegotiate the contract for short term. Or if you would rather keep your intellectual asset onshore, hiring a new breed of professionals for less pay (compare to experienced professional), is not a bad option.
One of the most important areas that IT companies should focus on to stay afloat is to take advantage of low customer demand start or improve quality initiatives. Companies should take advantage of slow periods and improve the quality of their existing IT services or software. When times are good there is hardly enough time to pay attention to improving software development processes or the quality of your software. You might have had a long term goal to implement new development methodology (Agile, ITIL), automate testing (Business Technology Optimization), or acquire CMMI or ISO certification; well, this could be the best time to bring those ideas to reality.
In order to make those ideas reality, companies do not require huge financial investment. As customer demand for new development is decreasing, organizations just need to properly allocate time and resources, which should be readily available internally. Improving the quality of existing software and IT services can easily be achieved by paying attention to details and fulfilling customer’s requirements. Companies need to adopt proactive approaches to quality assurance such as
On a final note, organizations require an IT service management road map to stay competitive. Every organization should be looking at the best practices for aligning their IT strategy with the overall organization objectives.