The downturn’s lasting impact

IDC recently released encouraging results from a survey of 1,000 CIOs and CEOs in 12 countries throughout U.S., Europe, and Asia Pacific. Of those surveyed, 85 per cent expect IT budgets to remain flat or grow in 2003. This optimism is subject to change, of course, with economic and political instability around the world. But for now, let’s assume for the purposes of this column that these issues take care of themselves (I’m not naive about such things, but I doubt you read this column for political analysis.) In an IT world hoping for an upturn, certain things have changed for chief technologists, and the changes are permanent regardless of the economic cycle.

First of all, outsourcing is here to stay. If you are still skeptical about outsourcing, there’s not much time left to get out in front of things and get over it. At InfoWorld, I have had to outsource certain functions of the IT department out of pure necessity, and frankly, I was somewhat reluctant. In better times, I was among those who thought that everything was best done in-house, and I staffed accordingly. Now, the PC desktop support, messaging infrastructure, and sales-force automation at InfoWorld are all outsourced and business operations are demonstrably better for it, financially and operationally. From a management perspective, I had to make tough staffing decisions when I outsourced those functions, but because I made these decisions relatively early in the down-cycle, I avoided the pain of more staff reductions as the business environment got even tougher.

I would urge you to take a hard look at outsourcing options at least every few months.

Note that with utility pay-as-you-go pricing, outsourcing is more efficient than ever. Like many businesses, InfoWorld has been forced to downsize during the past two years, but when I pay a per-desktop, per-month fee for desktop support and a per-user fee for the sales-force automation system, I save money immediately, helping to protect the company from further staff reductions.

In the new environment, the 80/20 rule applies more than ever, and this means purchasing off-the-shelf software and integrating it into your environment as best you can instead of undertaking large-scale custom software projects or absolutely perfect integrations. During the dot-com heyday, I managed teams building custom software, (specifically content management systems), in the media space. At the time, we were focused on achieving perfection and total customization for our business — 80/20 had become 95/5. Although I devoted substantial resources to developing custom systems, software development was not the company’s core competency, so the effort was expensive and distracting. Recently, I implemented an off-the-shelf content management solution at InfoWorld that isn’t absolutely perfect (none are), but that’s OK — it does what we need it to do now, it has a clear product development path, and we don’t have to maintain the core code. To twist a famous phrase from Steve Jobs of Apple Computer Inc., enterprise IT has moved on from “insanely great” to “good enough for today and at the right price.” This can be an adjustment for the end-users at your company, who might have grown accustomed to the endless tweaking of systems made possible by abundant staffing, so be prepared to explain the new “good enough” conditions under which you are forced to operate.

In the end, the discipline and new perspective that we have all developed over the past two years should serve us well as the economy recovers.

Here’s hoping it does.