IT Housecleaning: A Crisis is a Terrible Thing to Waste

Last month I argued for a technology two-step. I argued that we have the opportunity to have IT both ways, to have IT save money and make money. I also argued that the people who got us into the economic mess we’re in today handed us a crisis with which we must deal (as they sip martinis purchased with bailout money).

Yesterday someone said to me that a crisis is a terrible thing to waste, that there’s always a silver lining. If managed properly a crisis can be therapeutic – and even productive. After saying good bye to the last optimist on the continent, I started thinking about the implications of “good” crisis management (as Murphy whispered in my ear: “an optimist is someone who doesn’t fully understand the situation”).

Context defines options. When things are good, the “if-it-ain’t-broke-don’t-fix-it” crowd rules. “Management” is thankfully paralyzed when everyone’s making money. Why start arguments that are unpleasant when you can play golf?

Crises, on the other hand, force everyone to re-think almost everything, depending on the severity of the crisis. Today we have a major league crisis. Technology spending will fall dramatically in 2009 and 2010, and some CIOs I speak with tell me that 20% – 30% cuts are on the table. Thirty percent cuts are unrealistic without severely reducing services. (One CIO I know recently asked everyone to turn in their Blackberrys because the budget could no longer support Crackberry addicts, knowing full well that the resulting outcry would require “management” to find money to keep the addiction going.)

But as unrealistic as the budget cuts might be – and as clever as some of us can be in the art of budget manipulation – there will be major cuts in people, hardware, software, and especially services. The crisis is bigger than any I have seen in decades – much worse than the dot.com crash of 2000.

So where’s the good news?

Let’s try to see the crisis through an opportunity lens. What can we get done today that we could never hope to get done when things were good? How should we use the air cover of the current crisis to make the decisions that would have no chance of being made if things were OK?

Think carefully about this because – hopefully – the crisis will pass. There’s a window of opportunity that will hopefully close after a suitable period of pain has passed.

First, look at the people. Do you have enough? Do you have too many? Do they have the right skills? And be brutally honest, because you only get to do this now: when things improve, the appetite for chewing up people will completely disappear.

Do the high potentials still have potential or are they just high? Reorganization is the natural extension of people assessments (or is it the other way around?). Regardless of which comes first, crises provide opportunities to finally kill the ineffective PMO, promote the smart architects (and fire the dumb ones) and revamp the business relationship management office – among other organizational things you’ve been waiting to do.

Second, look at your processes. Now might be the time to re-define and re-assert governance – especially in the technology intake area. Chances are good that you don’t need any more projects, so shut down the demand for technology projects by defining acceptance criteria tightly. The governance around the procurement of hardware, software and services should also be tightened.

Take a look at business processes. Your business partners would kill for efficiencies that save money. Application development – if you’re still doing it – can be re-defined around agile and related methodologies. Think about mashups as a way to extend the functionality of your humongous enterprise applications.

Take a look at budgeting. One way to prioritize projects quickly is to draw a sharp distinction between discretionary and non-discretionary projects. Non-discretionary infrastructure projects can continue to be funded by the enterprise but discretionary projects should be funded completely by the business. This will help with technology demand and with project accountability. The last thing IT wants is a long list of under-funded projects destined to be late or likely to fail.

Introduce charge-back accounting for all technology projects. This will provide accountability and transparency – both in short supply before the world came to an end.

Next, look at your partners – and the contracts that tie you together. Now is the time to renegotiate all of them. Even if you’re happy with a vendor’s performance now’s the time to insist on a better deal – which you can get since the vendor is already way behind quota for last year and already for this year.

You might also conduct a “stress test” of the relationship. Is the vendor a true partner or a pain in the ass? Does the vendor add measurable value or barely contribute to your business? Could you get along just fine with fewer vendors to which you give less money? Are the vendors that you’ve already hired fully utilized?

It’s time to revisit the SLAs that bind you together. It’s time to introduce shared risk contracting and key-person clauses as well.

How about your hardware and applications? Assess your hardware architecture, server farms, data centers and optimization technologies like virtualization and voice-over-IP. Now is the time to “rationalize” the applications portfolio – and think about whole new alternatives, like open source solutions and software-as-a-service. A lot of digital technology is redundant and expendable.

Make sure you exploit this crisis. We all know how reluctant companies are to do anything, let alone things that are controversial or confrontational. But when the building’s on fire we’ll do just about anything to get out alive. Now’s your chance to fix some things you’ve been thinking about for years. Get to it before they put out the fire.

Steve Andriole is the Thomas G. Labrecque Professor of Business at Villanova University where he conducts applied research in business fl‡ technology convergence. He is also the co-founder of The Acentio Group, a new economy consortium that focuses on optimizing investments in information technology. He is formerly the Senior Vice President & Chief Technology Officer of Safeguard Scientifics, Inc. and the Chief Technology Officer and Senior Vice President for Technology Strategy at CIGNA Corporation. His career began at the Defense Advanced Research Projects Agency where he was the Director of Cybernetics Technology. He can be reached at stephen.andriole@villanova.edu.