With all the talk of worldwide double dip recession, the Euro Zone crisis, and the looming specter of falling over a proverbial fiscal cliff, it’s no wonder many CIOs find themselves in a difficult decision-making dilemma. Should today’s CIO brace for more economic uncertainty by focusing on cost cutting, or should they take a bolder tack and invest funds on new innovative initiatives that will bolster growth and yield a competitive advantage?
No doubt a tough decision fraught with risks and tradeoffs, so why pick one option over the other? Why not choose to do both?
The recent Gartner-Forbes 2012 Board of Directors and CEO Survey1 found that, with financial uncertainty around the globe, Corporate Boards and CEOs are hedging their bets. They are trying to figure out how to manage their businesses so a new recession does not find them as exposed as they were in 2008, while being prepared if the downturn is shallow, and rapid growth becomes the norm for the next few years. Coming out of this survey it is now becoming easier to see that market uncertainty does not just mean organizations will dig-in and cut costs – it means many companies are also looking for ways to fund initiatives to help differentiate themselves and grow market share.
The survey also found that half of the board directors were willing to invest in IT as a means to change the rules of competition, and accordingly, IT had the highest priority for investment in 2012, tied with investments in sales. That’s a pretty encouraging sign and vote of confidence if you are CIO. But the ‘hedge your bet’ strategy recommended by many Board of Directors and CEOs is easier said than done.
How do you execute on such a strategy? A good place to start is by simply taking inventory of the IT resources (both tangible and non-tangible) spread across the enterprise. By taking inventory, CIOs will have some very powerful information. That information when combined with ‘Business Context’ will provide the foundation to answer key business questions such as: What IT resources exist today? Which are needed to function, operate and grow the business? Which are not needed? And how can duplicate and obsolete assets be retired quickly and safely?
If CIOs and their teams can effectively deliver this level of transparency, they will have the information needed to execute on the cost cutting portion of the ‘hedge your bet’ strategy and limit exposure if a second wave global recession takes hold. With new insights and visibility over the IT resources spread across the enterprise, CIOs can embark upon a clear cost cutting path by consolidating and centralizing the many layers of different and obsolete technologies that exist in their businesses. The resulting cost saving can be re-directed towards investments that underpin the second half of the ‘hedge your bets’ strategy and fund promising innovative growth initiatives that increase the top-line and provide a competitive advantage.
Make no mistake: the ability to keep both growth and cost management in focus at the same time is very difficult in business, and will require a mind-set and tool-set that can help CIOs, business leaders, and their organizations to make more informed decisions while shifting from one focus to the other (see EA is Free blog posting, August 21, 2012). CIOs will know that they are effectively managing the ‘CIO dilemma’ and doing their jobs well on cost control when the CEO starts to emphasize that the CIO spend more time on growth initiatives. 2
1 Jorge Lopez, “Gartner-Forbes 2012 Board of Directors Survey: IT Can Change the Rules of Competition”, July 2012
2 Jorge Lopez, Mark Raskino, Dave Aron “Board of Directors, CEO and CIO Survey Comparisons Point to Actions That CIOs Must Take Now to Prepare ”, June 2012
