Surviving the Recession, a Quocirca series

In the first part of a weekly, 12-part series, Quocirca analyst Clive Longbottom introduces a framework for users struggling with assessing the main business and technology issues of these tough times...

Even before the events in the US on 11 September the outlook for the UK economy was beginning to look less rosy. Now, we are on the brink of recession and however hard government pundits try to talk us out of it they won't stop the pain being felt by UK Plc.

Orders are drying up and the cry to batten down the hatches until the markets are more amenable seems to be heard everywhere. Employees are being made redundant and merger and acquisition activity is on the increase.

The immediate reaction of the majority of companies when it comes to a recession is to cut costs and save their way through the problem. Unfortunately, this does not often work in today's highly dynamic markets, where only the fit and fleet of foot survive.

A complete halt to IT spending - or 'saving your way out' - is no longer an option for the majority of us. Only by being a survivor can you play in 'good-time' markets. We have (admittedly smaller) amounts of money that we will have to invest wisely so when conditions improve we are the ones who can react fastest and take the market by storm.

This obviously needs flexibility, both in business processes and in the technology that facilitates these. However, it is often the IT budget which gets hit hardest - based on the perception that IT has offered little in the way of real tangible benefits in the past and so can be passed over for the time being without adverse impact on the company as a whole.

Quocirca believes a recession is one of the best times to invest in IT - provided the technology decisions are business led and the future is always considered. In other words, keep the strategic big picture in mind but concentrate on tactical specifics.

The old economy required measurement of return on investment (ROI) and figures such as total cost of ownership (TCO) - figures that can be, on the whole, meaningless and self-serving. Most companies do not have the correct data on which to base full TCO and ROI calculations and measuring them will require them to maintain the status quo for an extended period of time - just when they need to change.

The new economy requires companies to be capable of rapid change and be able to deal direct with the changing external world of suppliers and customers as well as the internal world.

To facilitate rapid decisions on whether a project can help optimise investment strategies, Quocirca utilises measures such as a total value proposition (TVP), based on the prioritisation of business needs and solutions. We also look at using basic game theory rules, enabling rapid decisions to be made on whether to implement a strategy or not.

The idea is to follow the basic rules of:
* the business comes first
* the technology is a facilitator
* benefits need to be rapid
* the future will always happen

These make it possible to position your company as a recession survivor, to be in the leading pack when the markets turn around and to be a winner in the medium and long term.

In short, first you need to survive, then you can thrive. However, moving from being a still, small voice in the wilderness to gaining the backing of the main board for the grand plan is not facile - you need to be able to talk the language of the business and to be able to propose small but important changes that will keep you ahead of the competition.

Know who your customer is - and how to deal with them. Deal with the major changes in the mobility of your workforce and customer base. Optimise both the supply and demand chains alongside creating and maximising the windows of opportunity available to you. These things will all help define how successful you will be in the market. Going the whole hog with an 18-month project will only help your company go broke faster - this has to be done a bit at a time.

This series of articles will lead you through the business and technological arguments that will be needed to put together a strategy for surviving the recession. Each article will provide advice in a specific area, helping you to build a case for IT expenditure to take to the main board. We continue next week with a look at how prioritising business needs can lead to rapid improvements in your survival capability.

**Quocirca is a leading, user-facing analyst house known for its focus on the 'big picture'. For a full summary of its activities see http://www.quocirca.com, or reach the company's founding directors by emailing quocirca@silicon.com.