COVID-19 has adverse effects on many industries and IT is no exception to this. The impact can easily be seen in the form of a reduction in the IT budget, which increased during the last six years but this pandemic-induced recession has halted this upward trend. Despite changes in budget priorities, things remain stable and consistent before this pandemic hit.
According to Chris Ganly, Senior Research Director at Gartner said, “Survival, not growth, will be the priority for executives in 2020. Survival will depend on maintaining cash flows and income while continuing to be innovative with technology. Enterprises that fail to act may not survive this disruption or will have their subsequent recovery delayed.”
In this article, you will learn about seven actions CIOs need to take to survive and thrive during an economic downturn.
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Postpone Non-Essential Spending
If you are a business that is struggling financially and are planning to purchase non-essential items that you don’t need or use then, you should seriously reconsider your strategy. Instead of making these purchases, you should postpone until your business is financially stable.
Take a closer look at your IT budget and think about where all your money is going. This will help you identify expenses on non-essential items, which will make it easy for you to cut them down from your budget. By minimizing your non-essential expenditure, you can save some money, which you can use for something more important such as upgrading to the best dedicated server.
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Minimize Current Spending
IT leaders should collaborate with other departments to understand the business requirements and prioritize spending accordingly. Next, decide how much money you can afford to spend. Look for ways to minimize your current spending.
Identify vendor payments that you can cease, delay or defer. It might seem tempting to fall for buy-now, pay-later schemes but they are not beneficial for your business finances in the long run. Look for payments that are necessary to be made for your business survival. Always have a contingency plan ready if something goes wrong especially for high-risk vendors.
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Make The Most of Your Investment
Reevaluate all the projects which are currently running and differentiate between critical and non-critical projects. If you are in a critical financial condition, you can think about applying brakes on every non-critical project and divert resources towards business-critical projects. Try to complete these projects as soon as possible to ensure cashflow, which can help your business to survive through this economic depression.
Next, look at all the IT investments you have already made and think of ways you can get the best out of them. Ask mr robot yourself whether you are using your IT infrastructure to its full potential? If yes, then you are on the right track but if the answer is no, you either have to find ways to take full advantage of it or downgrade to a more modest setup that fits your needs perfectly.
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Delay Any New Spending
Businesses that are facing budget constraints can reduce the strain on their finances by delaying or canceling payments if possible. This will give you more breathing space financially. CIOs should never allocate or spend money on projects, staffing and upgrades which are not planned. Release third-party resources, services and infrastructure that you are not using. This will help you to reduce your overall bill. You can also negotiate with your vendors and supplier on payments and get a better deal in order to reduce the burden.
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Reconsider Your Existing Investment
Let’s say, you have already poured thousands of dollars into purchasing IT assets and upgrading your IT infrastructure. You can not roll back everything and get your money back but you should seriously reconsider the returns your existing investments are offering. If these assets are not delivering desired results, there is no point in spending more money on such IT assets.
Mr.Ganly further adds, “CIOs should inspect their organizations’ current consumption levels on all variable operating expenses – for example, cloud services and voice and data communications. On a service-by-service basis, either completely eliminate or take control actions to reduce enterprise-wide consumption levels by restricting or managing supply and renegotiating contract terms as necessary.”
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Reduce Consumption
Want to pay a smaller IT bill? Lower your resource consumption. Unfortunately, this is easier said than done. The reason for higher complexity is that you will have to bring operational improvements in order to increase its efficiency. This will enable your business to produce more with fewer resources. Meanwhile, you can also achieve this objective by asking businesses to shut off applications or services which are not in use or persuade users to migrate to another less resource-intensive alternative.
The end result of all these steps would be to reduce your operational expenses and you will succeed in achieving this goal. Apart from your varying operational expenses, you can also bring down your fixed cost by using these steps. For instance, you can move to a new location, which is cheaper or negotiate with vendors to get a custom package that perfectly meets your business needs. You can also leverage automation to reduce human involvement in a number of mundane tasks.
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Look For Alternative Financing Option
Most governments are offering financial assistance and bailout packages to help businesses survive this pandemic. If your business is eligible for such a grant, your IT leaders should collaborate with the chief financial officer to discuss how you can take advantage of this offer. In some cases, this assistance is also available at a state or local government level.
If you have an innovative project that you think investors will take a keen interest in, you can also use a crowdfunding platform and pitch your idea to investors. This will not only help you raise funds but also keep your business afloat during these turbulent times.
What steps you have taken as a CIO to help your organization get through these troubled times? Share it with us in the comments section below.