Survive the economic crisis with Smart IT strategies
Companies need to make strategic technology decisions now if they are
to endure the global slowdown. Senior director of Applications Product
Marketing at Oracle Anne Ozzimo, discusses steps business can take today
to survive tough market conditions and prosper in the future.
As the economic slowdown intensifies, executives are looking for ways
to cut costs and IT budgets are under the microscope. More than 60
percent of CIOs are cutting back on short-term technology spending and
postponing long-term plans, according to a recent survey by the
U.S.-based CIO Executive Board. IT budgets in the United States are
predicted to grow by only 2.3 percent in 2009, instead of the 5.8
percent growth originally forecast.
The economic crisis provides an opportunity for organisations to
create leaner, more efficient operations, because circumstances demand
that companies transform themselves to survive tough times.
Oracle took this approach during the last downturn, consolidating and
simplifying its IT infrastructure, and standardizing business processes
worldwide. As a result, Oracle created a stronger platform to support
future acquisitions and organic growth, and doubled its operating
margins in the process.
US based energy company Exelon understands the importance of
investing in IT during a downturn. Last year, it laundhe project to
deploy an integrated Oracle platform to eliminate fragmented and manual
planning and reporting processes and better manage its investments in
tackling climate change.
Despite the volatility of natural gas prices and the credit crunch in
the US, the company remains committed to the project due to its
strategic importance. “We can’t afford to stop investing in initiatives,
like our finance transformation program, that will help us navigate
through volatile business cycles, make prudent investments in our
operations, and return value to investors,” said Exelon Senior Vice
President and CIO Daniel Hill.
Innovative IT projects
Rather than slashing IT programs across the board, CIOs should
consider reducing complexity to take costs out of the business, and
focusing on innovative IT projects that deliver a fast return on
investment (ROI).
The key is to lay out a multi-year IT roadmap with both goals in
mind, then identify areas where you can make progress very quickly,
maybe in six or nine months. Ed Abbo, senior vice president of
applications development at Oracle, says many IT departments have cut
costs by reducing the number of applications across the business. Oracle
Application Integration Architecture, a common object framework that
lets companies create processes unique to their business, is designed to
attack the kind of IT complexity that is plaguing most customers today.
Effective CRM tool
One company that is taking advantage of this framework is Rackable
Systems, a US based provider of customized storage and server systems.
The company deployed Oracle E-Business Suite 11i to support its business
operations but did not have an effective CRM tool for managing leads,
opportunities, and sales forecasts. The company purchased Oracle CRM On
Demand and used Oracle AIA Process Integration Packs (PIPs), to link the
software to Oracle E-Business Suite in three months.
Rackable’s new CRM OnDemand solution automatically synchronizes
account information and associates opportunities with related quotes in
Oracle E-Business Suite. End users need only sign on to the CRM service,
and are able to see customer and product data directly through the
interface. Nucleus Research estimates that the company achieved a 330
percent ROI on the implementation in just 5.3 months.
High-ROI projects
During a recent interview with BusinessWeek, Amazon CEO Jeff Bezos
said, “There is no bad time to innovate. You should be doing it when
times are good and when times are tough, and you want to be doing it
around things that your customers care about.”
Bezos wasn’t just talking about investing in big innovations; he was
highlighting technologies that can drive small, innovative changes in
processes designed to delight customers, reduce overheads and drive
revenue. In fact, CIO Executive Board research found that companies that
excelled through the last downturn reserved at least 5 percent of their
IT spending for innovation.
In September 2008, global management consultancy McKinsey and Co
identified four areas where technology investments can make a
substantial impact.
The first was developing systems that provide insights into customer
segments and improve pricing discipline without increasing prices.
Second was rethinking supply chains and logistics to improve delivery
scheduling and inventory management. Third was enhancing support
processes such as call centres to improve customer satisfaction and the
last was sharpening awareness of risk exposure and improving
decision-making and performance management processes.
Reinventing processes
According to Oracle’s Abbo, customers must reinvent their processes
in response to market dynamics during the downturn. “For example, a
manufacturer might want to rethink the way it designs, manufactures and
distributes products in response to slower demand, greater pricing
pressures, or more volatile supply chains,” he said.
Ultimately, organizations need to invest in technology projects that
reinvent their business processes if they are to survive and thrive in
any conditions. By investing in technology initiatives that will help
them navigate through these volatile times, they will position
themselves for even greater success when better times return.
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