Technology and the Down Economy

Negative economic times generally have an interesting impact on technology tools because the resources dry up and organizations have less ability to take risks and buy new toys. So they replace this with learning how to use their current tools better, and figuring out how to leverage free technology tools. A simple example of this would be that small companies decide that there is no use spending $300 on Microsoft Office when they can use Google Docs for free. Another example is that instead of buying a whole new accounting system, people try to figure out how to extend the current system they have. In many cases this is a good thing because they learn that they can get a lot done with the horse they are riding instead of trading her in on the new model. Ergo, from a vendor viewpoint, there will clearly be winners and losers.

I like Google in a down market because their model is primarily free for tools, and funding that through advertising. Sure, their advertising revenues will drop, but their usage base will go up and as soon as the economy comes back, there they will sit with millions of additional users. I do not like Oracle, SAP, HP and Dell. These are easy suppliers to cut back on because they either make expensive software, or hardware that can be delayed. What about the small or medium sized business out there. How can they leverage technology in a down market…

Well, first off, be open to using free tools where you might not have earlier. There are open source applications that can be used if you will just invest some time to learn them. There are many clever marketing and advertising options that only cost your time to learn them and experiment. Every day of every week of every year at this point I see some new, free Website or online scheme that can help you find new customers or improve the relationships with current ones. Necessity is the mother of invention I suppose, but I would rather think if it as a recession is the mother of invention. The next thing to do is take some of the free time you have on your hands since many of your customers are now wringing theirs, and learn how to fully utilize the software you have already purchased.

This is a great time to take a deep breath and really take the investments you have already made and leverage them. The fact is that when things are going really well, we are too distracted to fully implement software and hardware systems, so a slow down can give us extra time to go back and really figure out how to use everything we have paid for. My observation is that software like CRM systems rarely get even 50% utilized. Even network equipment can be sitting there partially implemented. We have custom reporting software, but do not spend the time to really build all the custom reports or dashboards that we need. We have website content management systems that let us have complete control over our sites, but we don’t update them nearly as often as we should. My metaphor is that a soldier uses peacetime to clean the guns and do some target practice so that when the battle starts, they are fully prepared. The same is true for this downturn. Now is the time to evaluate all the technology you use, and invest time in learning how to fully leverage it. Then take the next step and figure out what free technology exists that you could be using. Then when the smoke clears and the economy rises like a phoenix, you will be prepared to leapfrog your competitors.

Hidden in this is a message that it is not wise to fire all your IT people in a downturn. Although they may not appear to be revenue generators directly, they are often the people that can assure you can generate that revenue in the future.

As I observe organizations girding their operations for a tougher economy, the layoffs are starting to come.   There is a right way, and a wrong way to decide what team members can be let go.  The wrong way is to just cut 10% across the board.  The right way is to evaluate each division of the organization and make a wise decision on the resources that can be lived without for a year or so.  The fascinating thing to me is that most leaders agree that the team is the most important asset an organization has, yet when times get tough, they look to cut the team apart as a survival strategy.  Alas, the reality is that some organizations have built up staff for the good times and simply cannot survive that heavy.

As it pertains to technology, it is critical to understand a few very important concepts before you let anyone go.  The first is that technology people are artists, and the construction of digital plumbing is an artistic process.  This is important to understand because artists are not that easy to replace.  I have seen companies lay off developers that they fought to get a year prior.  These developer/artists have a ton of institutional knowledge, and letting them go costs much more than the risk of keeping them.  The assembly of the digital plumbing is a step towards improved productivity so it is counter-intelligent to kick out the people that can deliver the productivity you need in order to lean out the white collar jobs.  Another point is that technology people spend years building and understanding the infrastructure and software in the organization.  When you let one go, you also lose very specific, and possibly unique knowledge that you will not get back very easily.  You can hire a replacement in a year, but it will take them months to learn what the last person knew.   Add to this the fact that technologists are normally supporting some of the innovative ideas that could actually help the organization prosper in the down times, and you have a pretty compelling argument for leveraging, not decimating, your technology staff in a downtime.

The bottom line is this…  In a downturn, organizations need to turn to the geeks and leverage theirs skills and talents to help the organization survive.  Letting them go is naive and dangerous.  Put them to work – make them improve productivity and support innovative and cheap technology usage that helps in the down times.  Use them to advance the cause.  They love to come to the rescue.  They love to use their artistry in valuable ways.  They are not ditch diggers to be disposed of when revenues fall back 10%.

Scott Klososky

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