'Do More With Less' To Ride Recession Wave

The economic slowdown is slowly engulfing the entire world and companies are being weighed down by all kinds of pressures to operate with tighter budgets without compromising on performance. Now, enterprises are not only expected to optimally use their resources but are also required to perform with even lesser resources, bringing the concept of ‘Do More With Less’ to the forefront in the enterprise arena.

According to Prof Sadagopan, IIT Bangalore, during good times, companies have developed a fair amount of fat all over the enterprise, which needs to be cut across mercilessly. They need to critically look at even simple things like the number of laptops or desktops. “If you have 3,000 desktops, then you can probably manage with 2,500 just as well,” he says.

IT can never operate in isolation, it has to be aligned with certain business objectives, believes P Sebastian, VP-IT, Mudra Communication. Thus, if business demands so, the company ought to spend; otherwise it is going to pinch the business.

Cost-Cutting Initiatives

The current economic crisis has forced CIOs to remain grounded and be vigilant about every small cost. Most of them are focussing on leveraging the existing investments to the optimum level. In the past six months, they have undertaken a number of initiatives to brave the storm of cost-related challenges.

The global luxury market is badly hit by recession where in diamond-related businesses are one of the worst hit. Satyanarayanan, VP and CIO, Dimexion Diamonds, says that even though budgets are not available, the IT department has to run. The show must go on. “In this scenario, I would recommend having lesser manpower and seeing to it that they deliver more. Have fewer servers and see to it that they give more output,” he says.

A recent survey by CIO Klub and Ernst & Young on ‘Enterprise IT Investment Trends Survey 2009’ indicates that technologies that lower cost and/ or improve operational efficiency shall continue to be the favourite of CIOs in 2009. Enterprises are willing to invest in technologies, which will allow them long-term efficiencies. Nishi Vasudeva, executive director-IS, HPCL, says, “We have e-enabled many applications, which makes the whole process very smooth, simple and also helps to compress time.” The company has taken initiatives like e-payment, e-collection and e-procurements. It has helped HPCL to reduce paper movement within various offices across the country and also save communication as well as courier cost.

Similarly, Metropolis Healthcare has invested in technologies like video conferencing and PDA devices. Video conferencing has helped the company to improve collaboration among employees while reducing travelling spends. “We have empowered our sales force with PDAs, which help them to spend less on making calls and travelling,” says Mohar Tiwari, VP-IT Metropolis Healthcare. The company has achieved significant benefits by enabling business functions with IT and has thus, reduced costs too.

Sebastian strongly feels that capex can be certainly postponed during tough times or one should innovatively renegotiate this capex and convert it into opex. In such times, smart vendor negotiation can help companies save a lot of money on IT contracts. “We are asking vendors upright for a 40-45 percent discount on whatever they are offering and a lot of vendors are bending towards that, as times are bad,” says Sebastian.

Prof Sadagopan stresses on adopting an unconventional approach of doing things. He suggests CIOs take a look at models like cloud computing. “Your yardstick is going to be simple, wherever you get more bucks for the bank, move your application to the cloud, if not, keep it within the enterprise,” he says.

He also suggests focusing on greening in a big way. Enterprises should focus not only on greening data centres, but also look at greening desktops; for example, having energy-saving monitors. Virtualisation also needs to be taken more seriously and should be applied seamlessly for servers, storage and network.

To Use Open Source or Not?

In these tough times, migration to open source can translate into substantial cost benefits and those who have not yet experimented with open source are advised by experts to consider it now. Prof Sadagopan suggests considering open source migration in case of databases, OS, tools, communication, networking and even for ERP. Development of apps can also be completely moved to the LAMP (Linux, Apache, MySQL, PHP) stack. “Red Hat has done a great job in supporting open source, but they do send a bill every month or quarter, so you can shift to Ubuntu,” says Sadagopan.

The direct benefit of open source is pretty clear; it helps to save a lot of money in terms of licencing cost. P K Thomas, CTO, Cleartrip.com, is an open source advocator. The company has saved a lot of money by using open source technologies like ‘Ruby on Rails’ for its railway booking platform.

However, in the last 10-12 months, the support resources of open source have suddenly depleted because many volunteers have lost their jobs. “So if you cannot rely on open source and if the cost of support for open source is going to be high, then you should not have an ideological war and actually look at closed source. If open source saves money, which generally is the go-for-it push factor, then closed source should also be an option, if it brings with it similar cost savings,” says Sadagopan.

Don’t Get Trapped in Hype

Despite the dark clouds hovering over CIOs, they should not blind themselves from seeing the silver lining and must remember that every challenge brings with it a ray of hope and opportunity. Sebastian believes this whole recession saga is a bit hyped up and one needs to be very prudent.

According to Sadagopan, recession actually provides CIOs an opportunity to metamorphose their role. Most CIOs understand finance thoroughly well, so they can actually perform a CFO or a CMO function. “We should all become multi-honed people so that if our primary role as a CIO is at threat and the organisation still wants us, then we can play a different role,” he concludes.