Jim Crammer said it best, "cash is king" referring to companies and individuals that have cash on hand to spend in this weakened economy. There are several key considerations in protecting your IT investment in a down market. The business planning process takes on new meaning when the spending of IT, which is usually higher than most other departments, is reduced and the headcount is cut or the payroll expenses are eliminated. As much as people are the most valuable asset, they are also the most expensive.
Now is the time to rethink the IT plan and highlight the key priorities that will facilitate the growth of the company as the economy recovers. There is a related process chain of issues that left unattended causes disruption and a gap in the company's operational processes. The planning phase is connected to visibility into the company key suppliers, inventories, cost and most importantly, your customers and the effect of the down turn on their needs and constraints.
Timing
Once the planning is revisited, the visibility into the top priorities assists in determining the best places for reductions or further investment without killing the key projects or people that would have had a great result. Timing of the investment is critical as well. To spend or not to spend; it isn't mutually exclusive. The timing of any purchase must be weighed against cash flow. There are good times to buy and to not buy and delaying spending money. At the end of a month, quarter or year, all payments should be held to reserve the cash to close the books. Most suppliers will work with you to delay payment until the first of the next month so not to have a negative impact on the close. Also, the purchase should be timed to align with the month end, quarter or year end of the vendors so to gain the best discount the vendor can offer.
The best protection of your IT investment is to make sure the systems are well maintained and secure. As the IT staff is reduced, the activities that were completed regularly become more sporadic, and in fact, some cease to be done simply because the task was never documented and no one else knows how to do it. Make sure all processes and procedures are well documented so even if an outside consultant is brought in on a short term assignment, the overall operational effectiveness of the IT assets will not be diminished.
These are uncertain times! The propensity to sit and wait for the economy to improve is outweighed by the risk of your critical systems and life lines to your business cut off or your customers swept away by competitors who have used technology to their advantage. Planning, understanding and evaluating the ROI and impact of IT projects shines a bright light on what is important to your business growth and in some cases the survival of the company. The upside to the current economic situation is the abundance of IT talent available at a reasonable rate combined with vendors and suppliers willing to offer deep discounts for companies with cash to spend. By smartly investing in IT today, your company will be poised to ride the wave of recovery and will be better prepared to compete in a new more competitive market.
Our Mission is to understand and deliver expertise at a reasonable price with exceptional results. JoMax Consulting has over 25 years experience in multiple industries such as Manufacturing, Aerospace and Defense, Pharmaceuticals, Chemicals, and Services. vince.benz@jomaxconsulting.com
JoMax Consulting
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