CIOs Can Turn The Financial Crisis Into An Opportunity

The impact of the global meltdown is slowly becoming more visible for Indian organisations. Companies have felt the initial panic and are now gearing up to face the crisis in the best possible manner. While in India IT has always been looked at as a cost centre, experts expect a slowdown in IT spending by enterprises in the near future.

Turning the Crisis into an Opportunity

On a brighter note, experts are also agreeing that the crisis can be actually treated as an opportunity by CIOs to prove their mettle to the business people. According to Satish Pendse, CIO, Hindustan Construction Company, CIOs need to ensure that IT investments are linked to their potential business value. With such an approach, the crisis can be converted into an opportunity.

So how can CIOs make these trying times work to their favour? Due to the crisis, Pendse feels that even the management will be more serious about adopting various means of strengthening the bottom line. “They will be more serious about leveraging the IT investments already made,” he says. Umesh Jain, CIO, YES BANK, says, “I think this is a great opportunity for CIOs to demonstrate the agility of IT by aligning it with their businesses.”

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CIOs should use this opportunity to firmly demonstrate the strong correlation between IT investments and the business value derived from them. This will also help him to draw more seriousness towards IT, which will help in the long run, feels Pendse.

In terms of delivering business value, IT can either help organisations to increase revenue or decrease costs. While increasing revenue in such trying times may be difficult, decreasing cost is certainly possible. IT can help to cut cost in many ways. K M Asawa, DGM-IT, Bank of Baroda, says, “Shifting branch level operations whose execution requires expensive space and manpower towards self service areas such as e-channels (ATMs, Internet banking, cash/cheque deposits through ATMs etc) offers possibilities to reduce operating costs.”

According to P Sebastian, VP-IT, Mudra Communications, CIOs will need to wear two hats in these testing times, that of ‘Cheap Information Officer’ and ‘Chief Innovation Officer’. In the first role, CIOs need to look at increasing operational efficiency and optimising costs while in the second role, they need to innovate and create new sustainable value.

As project initiators, CIOs will need to prioritise projects with reference to the changing requirements of the business. Jain feels that CIOs should identify the key projects that they would like to continue and those that can offer long-term benefits. After identifying the key projects, CIOs should focus on them and complete them as if there is no slowdown, feels Diptarup Chakraborti, principal research analyst, Gartner India. The projects have to be undertaken whole-heartedly otherwise they may not be able to serve the desired purpose.

Jain feels that it is also a great time to ‘invest’ effort and time in areas, which are important but not urgent and require thinking and strategy rather than focusing on all out deployments, which in turn demand huge spends. “Focus on processes, risk, training, strategy and architecture. Clean up your management and governance act. Get your plan in place so that you are ready to take off once the storm is over,” he says.

Business Case

As enterprises face difficult times ahead; business managers are likely to be apprehensive about IT investments. Asawa, however, feels that IT can open up cost saving options and bring to light efficient business models to help tide over the crisis.

How management would react to IT demands will also depend upon the kind of investment proposed. Pendse feels that if an investment can reap immediate business value, then there won’t be any apprehension. Apart from having a stronger business case, CIOs should also ascertain that the time gap between IT investments and the realisation of their value should not be very wide. Jain suggests that CIOs should critically evaluate all components of their portfolio – operations, projects, people etc, and then go back to the business with inputs on how IT can pitch in with its bit.

Business managers would be under tremendous pressures for both the top line and bottom line. Sebastian claims that this is an ideal situation for CIOs to prove to the business managers that they can prove to be real partners in progress. “Wearing the innovation cap, CIOs can help business managers derive optimal benefits from IT and can help improve both the top and bottom line figures,” he says.

With the changing market dynamics, managers will rethink their business priorities and may accordingly decide to put some projects on hold or scrap some completely. Chakraborti feels that while convincing the management about IT investments, CIOs should show them what negative impact may be generated if the investment is not made. “We need to have one thing clear in our minds that even during a crisis situation, certain fundamental investment has to continue,” says Chakraborti.

Business managers also need to change their approach towards IT departments. The IT department is not merely about maintenance of systems. Chakraborti feels that IT should be treated like any other function or department of the organisation and in such difficult times, managers should focus on getting maximum value out of this department.
From all of the above, it is clear that business and IT will need to walk hand in hand to tide over the crisis and it is only the CIO’s agility and skills that can anchor the organisation through these rough waters.