Nov 032009
 

“The worst may be behind us.”

So said US President Obama in August, ever the optimist. He was not alone, however. Joining him was a rather large chorus of investors who over the past few months cheered some of the economic data, driving the stock market up.

Since I have a boat and am periodically in the habit of watching river and lake levels, especially in times of floods, I have been struck by the time-based relationship between rainfall, river levels, and lake levels. Rain falls first (or snow melts), and the inches of rain are counted in minutes or hours. Rivers surge days later, well after the cloudy weather has been replaced by sunshine. And lakes, last in the water chain, stay elevated for weeks after rivers have returned to normal. Since my boat is on a lake, my boat can’t go back into the water until after the lakes have returned to normal. One year I missed a month of boating due to a few days of rain.

For this economy, the stock market is like the weather (rain or shine). The corporate quarterly earnings are like the rivers. And the jobs data (unemployment) is like the lakes. The lake isn’t filling as fast as it was a few months ago and may actually be receding. If so, then it is time to start thinking about IT strategies for an up market, right? Back in September of 2008, I wrote about strategies for a down-market and recently revisited them. Interestingly enough, I recommended strategies for a down-market that don’t differ too much from one that is rising. Here are some things to consider:

  1. Help your firm reinvent its business model. After being put on a back burner for a year, innovation is back, but now it is pointed at strategic transformation. This recession has left many firms’ business models terribly weakened. Many firms will try to reinvent their business models. In many cases, IT will be asked to contribute to designing the transformation.
  2. While you may divert attention away from cost cutting, avoid the tendency. Stay at it but look at it in terms of productivity growth, not hasty slashing. Productivity improvement is a fundamental competitive activity. Do it or die. If your market is improving, now is no time to get fat. Continue to invest in automation and business process improvements to improve productivity.
  3. Prevent redundancy and bloat in system business processes. If you have trimmed well on the downside, exploit synergy on the upside. And by all means keep your firm disciplined in holding the line on excessive IT redundancies. If you can’t avoid adding redundancy on the upside, then you didn’t do a good job of restructuring on the downside.
  4. Plant bulbs. Get back to those infrastructure improvements that you deferred last year, especially as infrastructure equipment costs may still be low.
  5. Continue to find low-cost, highly skilled IT labor. Silicon Valley has record unemployment at the moment. So do many cities affected by the downturn. People are housebound and can’t easily move to new cities. Leverage a distance workforce, if possible. Labor prices are down for both domestic and international talent. Be creative and you will probably find excellent talent at lower prices.
  6. Accelerate the investment in technologies that can improve the customer experience. If your firm is in a superior financial condition, focus on your weakened competitors even more. Markets are won and lost in transition. Hasten your competitor’s demise.
  7. If you listened to me last September and made progress on customer and product analytics, you should be in position to begin using that data now. Data-driven insights can be used right now, especially if they can exploit any increase in sales activity in your market.
  8. Keep listening to your business units and their customers better and make quick IT adjustments as needed. When markets stop shrinking, only competitors who managed the downside well can take advantage of the rebound. If you are one of the stronger firms, continue to make quick maneuvers. Make sure IT is ready to help the business units. If you are in one of the weaker firms, polish your resume. If you cut too deeply in this last downturn, you may have some difficulty in responding to new strategic challenges.
  9. Buy now. The IT vendor market place may still be soft. Most firms trail in picking up purchasing, so use the lull to continue to exploit lower product costs. Many vendors are likely to have had lackluster Q2 sales. Use that to your advantage, even as things pick up. Negotiate everything and try to lock in with long-term contracts. As the market heats up, shorten your contract periods and move to spot pricing, reducing purchasing where you can.
  10. If you have invested in agile techniques for managing IT projects, now is the time to use this. It is precisely at this time that agile methods may be the most effective, especially if you can quickly and continuously improve IT systems that directly affect sales and retention or strategic transformations ahead.

As the market begins to improve, many firms stand still, waiting for enough of their competitors to move first. If your firm has the right financial and organizational pieces in place, don’t hesitate. Pounce.

Discussion

  One Response to “IT Strategies for Rising Markets”

  1. […] IT Strategies for Rising Markets by Vince Kellen on The Cutter Blog […]

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