Why investing in information technology in a recession is a sound business strategy
| Executive Summary: Increasing spending on information technology (IT) in a recession might seem counter-intuitive—but there are sound reasons to spend money wisely on IT innovation. Romi Mahajan, former director of technical audience and platform marketing for Microsoft and now chief marketing officer for Ascentium, explains why investing in IT makes good business sense even in a slow economy. |
Neoclassical economist Paul Samuelson’s quip that “funeral by funeral, theory advances,” is particularly appropriate to the year 2008 as the fundamental structure of financial and credit markets is undergoing a tectonic shift, from which its recovery will be at best partial. The grim pall-bearers of peoples’ hopes and dreams and the shriveled corpses of our collective economic perceptions are attempting to justify death (actually murder) by invoking and inventing tepid arguments about “excesses” and not about the fundamental flaws in the system. As we speak in soft whispers of the trillions of dollars of wealth that has been erased and of the need for austerity, as we call up the specters of The Great Depression, two categories of white-collar professionals are running scared. Both Marketers and IT staff are looking over their shoulders, hoping to avoid the sickle. Inversely, in the case of both, an era of recession is exactly the time to redouble our faith in (and investment in) both of these categories. In this instance, I plan to focus on the topic of IT in a recession.
In many cases, conclusions are not truths per se, but instead are the results of assumptions we make. If we assume IT is a discretionary cost, then we are no doubt to conclude that IT budgets should be slashed in tight times. If we assume that IT is a commodity, without nuance and specificity, then we diminish its value and must indeed conclude that recessionary times imply a requisite “belt-tightening.” If we assume that IT Professionals are “latent” talent whose collective intellectual and creative potential is “limited to IT,” we are easily led to the bitter conclusion that both the art and science of IT and its practitioners represent that very status quo that hard economic times force us to change.
I make no such assumptions.
Smart IT as Comparative Advantage
Does IT cost money? Yes. It is a “cost.” No. IT, done well and coupled with business process, renders comparative advantage and must be put on the “investment” side of the ledger, not the “cost” side. To understand this concept, it is entirely unnecessary to spend even a moment in the realm of theory. Instead, it is more revealing to examine everyday practicality as evidenced by a few representative examples:
- Single sign-on. The ease and time-savings conferred by single sign-on in an enterprise that demands complex functions of each employee is impossible to overstate. That ease and yielded time can be directly correlated to increased productivity, which is a clear source of comparative advantage in the marketplace.
- CRM. The real-time ability to understand the delicate equation between company and customer through this “artifact” of IT is increasingly seen as a differentiator between top-tier and also-ran companies.
- Communications. IT-mediated messaging is a necessary component in the production of value.
Security and Provisioning. In a slow-growing economy, one’s assets have to be protected and leveraged in ways unnecessary in boom times. Thus, recessionary times call for increased attention to security and adjacent areas.
The essence of each of these points is clear to anyone who has been in an environment in which these were NOT emphasized.
IT Professionals as Innovators
Innovation is the engine that pulls economies out of recession and onto a growth footing; IT Professionals are great sources of what I refer to as “portable innovation” insofar as their contributions are put to direct use across the enterprise. Sound far-fetched, even fictitious? I argue that IT is inherently innovative, but the process of bureaucratized management (the same management that holds as a fundamental canard that IT is a cost center and must be slashed in a recession) does NOT allow for the free and easy replication of this innovation in ways that are easily visible.
A few things to consider:
- Innovation comes from the systematic and irreverent process of though-trial-error-revision. IT lives on this process. There is never only one way to do IT.
- IT cuts across the organization; as such it can either enable or stifle all activities. All the more reason to continue investment in it.
The global economic woes that keep us all awake at night, while difficult to endure, offer a unique opportunity for us to examine our enterprises with forced honesty. In this process, IT should emerge as one of the few areas for increased investment. If the easy, short-term, muddled logic that got us into this mess in the first place is the one we use to determine IT’s fate, then we’ve made a grave collective mistake.
