IT Investments CIOs Should Consider Before Recession Strikes

Article contributed by Chad Chiang, Managing Director UK, Synology

When a slowdown in economic growth is inevitable, economic recession becomes the primary consideration on the minds of most business leaders.

If a recession does occur in the short term, it will create an unprecedented financial cycle. According to Ryan Prindiville, a partner in accounting and business advisory firm Armanino Consulting, 2022 will see record low unemployment in the U.S. but record high inflation.

Therefore, the Chief Information Officer (CIO), IT director, or business executive must face historically high prices of technology and services. Even Apple Music, Apple TV+ and Apple One, for example, will be impacted by a UK price hike in December 2022.

Meanwhile, corporate performance has been growing at record levels over the past few years. So, you're going to see a divide of opinion that business leaders, forecasters and seers have never seen before.

I believe that it is common sense that companies will cut costs before the recession; however, cutting certain projects may have some negative impacts on companies. It is better to seize the opportunity to accelerate investment to improve the long-term efficiency of enterprises.

Some CIOs may want to move systems to the cloud because the business will want to have the ability to scale up or down in a controlled recession. But there are investments that IT executives and CIOs need to make now to withstand a long-term downturn.

However, investing in these projects is not necessarily a short-term solution. IT leaders should gradually plan for a more flexible environment, but a three to six-month adjustment timeline is required.

The important goal is to think about how to change the technology organisation comprehensively and consistently, to ensure that investment in important projects can expand the base and create flexibility for the enterprise.

Here are a few areas that IT executives should give more thought to, in order to stay ahead of an uncertain economic climate; especially in areas where, recession or not, shifts can have long-term operational benefits.

1. Gain a deep understanding of cost and value structures.

IT leaders should always have a deep understanding of cost structures and the value that IT services and investments can bring to the entire organisation.

For executives who haven't figured out how to establish transparency and clarity about their IT investments, now is the time to invest and create the system. Doing so will help IT executives make informed decisions that can save costs or support additional investments.

In most business organisations, most of this information belongs to tribal knowledge (which refers to the knowledge owned by a specific ethnic group), which is not easy to obtain or act on.

2. Doubling Down on Agile Development Methods.

If your organisation isn't already investing in adopting agile development methods, skills and processes, use this downturn to give it a boost.

Building an agile toolset is not something that can be done overnight. If businesses want to remain resilient through a potential economic downturn, now is a great time to start transforming.

Adopting agile development methods allows IT to increase the frequency and depth of updates to corporate development programs to align with corporate development priorities and directions.

Enterprises should adopt agile methods to ensure that systems in a constantly changing environment can perform corresponding functions for the enterprise.

In challenging times, increase the frequency and depth of adopting agile methods, strengthen connection and execution capabilities, and enable enterprises to face rapidly changing challenges.

3. Increased investment to improve predictive analysis capabilities.

A cost-effective investment that IT departments can make now is in the field of business predictive analytics and intelligence, providing organisations with better tools to gain insight into enterprise spend analysis.

IT leaders should invest in more analytical capabilities, more useful and smarter reporting tools, and greater project financial transparency to help smart CFOs make better decisions.

4. Improve efficiency faster.

It pays to act first before a potential recession takes hold; the CIO should promote and protect projects that will improve efficiency and productivity.

IT executives should seriously consider project initiatives that would be at market risk if not accelerated. If the downturn does affect organisations, any cost-cutting or efficiency-enhancing measures implemented now will lead to a better overall position.

We found that the IT departments of the top 10% of enterprises automated processes 2.1 times higher than their peers, and finally reduced the cost of operating and managing technology by 47%.

Before the recession began, certain departments were already able to automate to a considerable degree, including HR, finance, and IT itself.

Any IT executive concerned about the potential financial impact of a recession should focus on implementing technologies such as automation so that developers and systems integrators within the organisation can free up IT team members' time for more impactful work.

5. Reallocate operating cost savings.

During a recession, IT operating costs may naturally decrease. A smart CIO will shift some of those idle operating costs to new IT infrastructure instead of wasting that money elsewhere in the business or sitting in the bank.

The CIO should effectively transfer these savings to equipment that improves infrastructure efficiency to accelerate the progress of existing projects.

6. Constant looking for the best alternative

IT solutions to get the job done. Paying the big money on IT equipment doesn’t always guarantee performance or getting the same value return, the IT world and technology are constantly evolving, be open-minded to try any available solutions that do the exact same job but with an affordable price tag, especially in the networking and storage area.