Combating the Slowdown : Ideas By CIOs for CIOs

Treat the slowdown as an opportunity to optimize your processes, invest in the right technology and people, so that when good times return, you're ready to surge ahead

Monday, June 01, 2009

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We all know that the entire world is passing through an economic crisis, and how organizations are doing cost cutting like there's no tomorrow, just to stay afloat. It's also a known fact that technology can help in these times. To find out how it's actually helping, this time during the Best IT Implementation Awards process, we asked one simple question to all the CIOs-to tell us one idea that they've adopted, which is doing wonders or is likely to do wonders for their organization. So from the 125 or so detailed audit forms we received, we managed to pull out quite a few good ideas. While we would have loved to cover each idea separately, it would be beyond the scope of the magazine. So instead, we've analyzed all the answers and summarized the key take-aways from them.

Slowdown is an opportunity
The most important take-away we got from all the ideas is that a lot of organizations are viewing the economic slowdown as an opportunity in disguise to explore new avenues for expanding their business. They're improving their existing processes, reducing costs, and improving efficiencies-so that when the good times return, they'll be in a better position to leverage it. In fact, some CIOs even felt that there are ample opportunities in the market for good ideas, and for quality delivery of products and services.

Anybody who offers these won't feel the pinch from the slowdown.

Another important fact that's often missed out is that this is also the best time to invest in new technology. That's because prices for everything are at an all time low, and you can negotiate even further to close some great deals. This is also the time you can get cheaper funds from banks, as one of the project heads pointed out, especially in the micro-finance segment. So organizations with deep pockets or from growing industries can reap the benefits of such deals. The others would have to find smarter ways of doing things, and hone their negotiation skills to get heavy discounts on IT purchase. The motivating factor here is that those who invest now would be in the best position to reap the benefits of their investments later.
It's also a time to increase non-monetary activities like partnerships with other organizations, better collaborations, etc. These could help you improve your reputation in the market, increase visibility, get more branding, etc. Besides external partnerships, organizations are also looking at consolidating their internal business lines to harness synergies and redeploy resources to emerging areas based on changing business cycles. Some CIOs have even requested all departments to give priority to internal IT services instead of outsourcing work to external agencies.

Cost control is the mantra for most organizations. Optimize all resource usage and automate processes to reduce costs wherever possible. CIOs are watching their projects more closely than ever before to ensure that they don't over shoot costs. Both CapEx and OpEx are being monitored and controlled. Doing more with less is the new slogan making rounds in a lot of organizations. Organizations are trying to conserve cash without compromising on quality of service, which requires one to differentiate between 'nice to have' and 'must have'. All solutions being considered for deployment are being linked to revenue.

There's also stronger emphasis on measuring IT expenses over long term, with proper TCO and ROI calculations that are guided by organization's business needs. All technology investments are being measured by the ROI they provide.

Many organizations are even worried about their power consumption, and are therefore taking measures to save electricity. For instance, one of the organizations is displaying "SOS" Flyers, and putting up "Switch Off Something" posters so that people learn to switch off lights and fans before leaving the premises.

Some organizations are even managing to increase their topline, control their costs, which in turn is giving them a much healthier bottomline. We're sure others would love to find out how to do that.

People management
Measures to combat the slowdown don't start with downsizing. In fact, we didn't hear that word from any of the project heads. Rather, we heard very encouraging suggestions on how to manage people. Many CIOs believe that they need to keep their teams self motivated and committed so that they work with you for long run.

This is a difficult job, but a lot of organizations are attempting to get their employees to work more for less. They're being quite honest about the slowdown and its impact on the organization, so that the employees understand the situation and help their organization to sustain in these hard times. Moreover, many are creating opportunities to upgrade the skill sets of their team members and helping them imbibe a feeling of ownership towards the organization.

Recruitment freeze has of course happened across most organizations. So, one alternative that's being adopted is optimization of manpower over multiple projects to prevent layoffs. This way, the same team is spread across different projects, till market conditions improve and allow for recruitments to happen. Moreover, by using multi-skilled smaller-teams for projects is obviating the need for high-end expensive resources.

Another thing being practised is to empower front line leads and managers to innovate within their sphere using tech and tools, and domain processes to improve efficiency or cost reduction. The company followed this practice saw results in terms of some of the complex processes that required highly skilled resources being transformed into a chain of simple processes that could be accomplished by resources with normal skills. This helped the organization remove dependency on scarce high skilled resources. This in turn helped the organization to get the right priced services to customers.

Some organizations are doing better route management for their sales team. So one organization has combined smaller routes into a single one, so that one salesperson ends up covering multiple routes in one go. This allows better coverage with the same manpower.

Why should you only look at internal manpower? Some organizations are even helping their customers apply innovative methods to improve productivity, reduce costs, increase efficiency, and reduce cycle times. That would also be a great way to establish better relations with your customers. When it comes to vendor management, there's only one word that resonates across: Re-negotiate. Most vendors would be willing to provide you all the support you need. If not price reduction, you could negotiate a better deal for the same price. Just like you don't want to lose your customers, your vendors don't want to lose you.

Technology to the rescue
Most project heads are relying heavily on technology during the slowdown. Several of them want to invest in technology while the economy is sluggish, so that they can drive better returns when better times return. Moreover, this is also the right time to buy technology because you would get the best deals now.

Some of the technologies being used are well known-VoIP, video, and web based conferencing to reduce travel costs (which could run into lakhs of Rupees), virtualization and consolidation of servers and storage to reduce device clutter, save power and real estate in the data center. In fact, some organizations were so impressed by virtualization that they've decided to migrate their entire infrastructure to it. Some other CIOs feel that implementing business apps like CRM, SCM, SEM and SRM can have a significant impact on both top and bottom line.

Open Source adoption amongst Indian enterprises seems to have increased post the slowdown. In fact, some organizations are taking bold steps to use Open Source software in areas like Enterprise Content Management, Business Intelligence, and Digital Assets Management. Others are simply increasing their usage of Open Source software.

Paper and printing are a significant cost to every organization. One solution is to look for ways of reducing paper wastage. One organization has setup an Intranet/Internet based centralized application for digitizing workflow to have a paperless office. Files would be captured at source and their movements across the office will be tracked thereby reducing the paper requirement and footprint required to store it. Not only that, but this organization also realizes that paper can't be completely eliminated from the office. Therefore, they've developed a special ECOFONT, which can reduce usage of Toner/ink by 20%.

Besides new technology, some organizations are leveraging investments already made in their IT infrastructure, such as their ERP implementations. For instance, an oil company is using its existing expertise in the oil domain, combining it with their skills in SAP applications and doing implementation consultancy projects to earn revenue for the corporation. This organization is also using web services to cut done the operational cost. When there's talk of using tech to save costs, then a discussion on green IT becomes pertinent. There are organizations deploying technology to reduce the carbon footprint, conserve energy and minimize wastage-replacing CRT monitors with energy efficient LCD ones to reduce power consumption, replacing conventional servers with Blades, and of course by using virtualization and consolidation.

Another interesting cost cutting measure is to use the mobile platform to reduce real estate requirement and hardware requirement at the back office. There are organizations that have been significantly impacted by the slowdown, such as the financial services or private life insurance sectors. This is driving them towards largely untapped rural areas where there's tremendous potential for sales. The rural business has its own set of technological challenges largely centered around availability of the network to conduct business operations effectively. One insurance company has adopted an offline suite of applications for various activities such as receipting, contract creation and client creation. This facilitates smooth running of operations from rural areas with a server/local model with simple uploads into the centrally located database through various upload tools.

The Indian Govt. departments are using technology to reduce cost in transaction-based services like paying taxes, obtaining licenses, providing information to the public, etc. If all of these are done online, then it can result in significant administrative cost reduction for governments. The online facilities can also enable better personnel utilization, allowing more focus on citizens who require more personal attention. The delivery of digital services that can be accessed 24 hours a day, 7 days a week from home, the workplace or even the street, also provide convenience to the public.

Business Intelligence software is also being used for cost savings, because it can provide real time MIS and analytical reports for faster and accurate decision making.

Unified Communication applications are also being used for specific business goals and requirements. For instance, one call center is using it for offering better customer service, improved and a more blended interaction, improved workforce productivity, and more streamlined and optimized collections. This call center feels that UC apps are much better than previous generation, proprietary, siloed and hardware-intensive computer telephony integration (CTI) architectures. They feel that maintenance costs can be reduced by 20% and productivity improved by 10% by using unified communications applications.

Inhouse development versus buying commercial software is another option being considered. If you have the right skill sets inhouse, then you could save significant costs by designing your business applications inhouse. One organization saved 2-3 times the cost that they would otherwise have paid if they had purchased a readymade commercial application. Moreover, designing apps inhouse gives you more control over the processing power that would be used. So you could avoid unnecessary processors, thereby reducing hardware cost. Moreover, application software design could be done in such a way that the necessary expertise is abundantly available in the market.

Other technologies being used are MPLS VPN to reduce bandwidth cost, and SaaS to cut down on the CapEx.

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