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A framework on how IT should plan for a recession, and recover quickly

Too often, despite seeing the warning signs, companies are not prepared to properly face a recession. Just like a System Disaster Recovery Plan, having a plan for economic downturns is vital. Recession proofing IT is a crucial piece of that preparation since the department often holds a large operation budget and a substantial project pipeline. If played correctly, a CIO can not only cut costs but also be a catalyst for the recovery plan. As we enter uncertain times, IT needs to be ready to act as a leader in setting an example.

A Time to Shine

Although many see IT as a cost center ripe for compression in tough times, as stated by McKinsey amid the COVID-19 pandemic, “We know from past crises […] that companies that take a slash-and-hold approach fare worse than those that both prune and thoughtfully invest”. The office of the CIO has a crucial role and a responsibility to take full advantage of the situation and turn the recession in an opportunity to show lean efficiency and be vital to the recovery. In the CIO’s Playbook – Framework to Recessions, you will learn the fundamentals of that approach. The critical areas of attention are:

System Rationalization

It is essential to pre-emptively understand the current state landscape of systems and solutions that are the direct or indirect responsibility of the CIO’s office. This effort includes surveying the current internal and external environments to catalog the solutions and map their importance based on financial vs. business impact. Ultimately, this enables the CIO to understand where he can find cost leeway and where criticality lies.

Project Prioritization

This exercise requires an objective re-evaluation and reprioritization of all projects, large or small, against the backdrop of the new market environment. Although this activity is one that can only be executed upon a recession’s arrival, a proper methodology to its implementation is crucial to ensure quick and actionable results.

Human Capital Planning

To view this task as a rationalization of the workforce to reduce cost would walk pass substantial opportunities for future growth. Granted, cost-constriction pressures can require the reduction of the workforce, but the market may also offer opportunities to attract key talent at a more affordable price point. Also, taking the opportunity to pivot to right-shore contract workers may provide benefits suited to capitalizing costs. Opportunities will abound and should not be ignored.

Contract Streamlining

On the doorsteps of a recession is the perfect opportunity to review every licensing and maintenance contract to assess value; Vendors will likely also be more receptive to renegotiation to maintain revenue. Alternatives may arise through creative analysis of the market and vendors (ex. Third-party maintenance). It could also be the opportune time to invest in a move to cloud and favor some immediate ROI. Finally, it is an excellent opportunity to assess the health of the vendors supporting the business solutions and adjust where required.

Recovery Planning

Recessions have an average cycle of 1.5 years, and too often, companies are not prepared to hit the ground running when markets become more favorable. During the recession, while projects and markets are throttling back, it is the perfect time to prepare: Investing in innovation, protecting key assets, socializing new opportunities, all are critical to ensure a competitive advantage at the restart.

The CIO Playbook offers a transparent methodology to accomplish the above quickly and effectively. It breaks it down into three major phases, which include business surveys, inventory listing, innovation health assessment, plotting and rationalization of systems/projects/contracts, and finally, the establishment of a roadmap and path to full recovery.

Moreover, in the current unprecedented market conditions, scrutiny of the CIO office will be unparalleled, and so will be the expectations. Every CIO needs to be prepared and lead in strategic cost control and make for a successful recovery.