In 2001, when the tech bubble burst, I had just graduated with a Computer Science degree, and was looking for work. To say that things weren’t exactly peachy back then is an understatement. Luckily for me I happened on an interview with a company that was privately funded and which understood that in times of
recession some excess fat needs to be trimmed – but not the muscle that drives a company. That company went on to produce very strong results less than a year later due to a superior product – a direct result of continuing to invest in hiring exceptional talent while avoiding the overindulgent tendencies of richer times.
Unfortunately in times of economic uncertainty such
wisdom is uncommon. With all the recent talk
about a recession being around the corner there is a lot of fear in the
tech industry, especially among startups which are struggling to compete with
new attractants for venture capital such as the likes of alternative
energy exploration. The problem with this approach is that when the economy slows or stalls, some corporations think only of near-term. This usually leads to cost
cutting across the board, but most prevalently in initiatives such as
technology, software and IT staff that are not perceived as necessarily
contributing directly to the bottom line.
This is a mistake for the simple reason that these cuts inevitably lead to a less motivated workforce that finds it self stretched beyond its means as a result of trying
to maintain the same level of service, less budget and therefore with less tools and less people.
Technology is a key driver of business these days, so dramatically cutting IT budgets can actually cost more in the long-term than the benefit of savings achieved in the short-term. This long term loss manifests itself in many ways, but most immediately in the loss of knowledgeable IT staff and the shaky infrastructure
that accompanies a departure from IT maintenance.
This takes us back to the title of this post. In times of financial uncertainty it is necessary to tighten belts and trim some fat off an organization. This can
be achieved by cutting back on unnecessary items like kickoff meetings in exotic locations, business class travel when coach suffices and so on. But to trim the muscle that drives an organization by failing to maintain infrastructure and letting go qualified staff that will only need to be rehired and retrained once the economy turns around is a long term mistake.
If we have learned anything from the first tech bubble, it is that these are the times to consider projects like automation, integration and federation, as some
of the highest costs of running an IT reliant company are in the high levels of obsolescence that accompany the good times. Corporations need to use a slowdown in the economy to their advantage and build a stronger, more resilient, infrastructure that will help them overtake the competition when the economy
turns around.
-- Jonathan
