Business Intelligence… excellence in a recessionPosted: March 4, 2008
When ever the economy slows down companies freeze recruitment and IT spending to maximize profit. IT vendors whip out their marketing pens and emphasize cost savings that can be achieved with their offerings. The issue boils down to demonstratable ROI and if that return can be seen in the same budgeting cycle. Even then it requires a full frontal assalt against multiple layers of decision makers.
My issue with this argument is that why should companies be more interested in cost savings during an economic down turn versus a bull market? Whatever the economic cycle, there is always a need to reduce cost and maximize profit. I once read a nice quote in a financial paper by a CEO during the last recession: "When cash runs out thats when thinking starts." In an economic down turn CEOs feel the pressure more than in a bull market and that is when creative thinking starts. So the reason why cost reducing technologies seem to have more pull in a recession climate, is really due to a human reaction of the senior management and shift of priorities.
The forest industry does this better. They reduce capacity just before a recession and increase a few months before the up swing starts. Their investment cycles go exaclty in the oposite phase as the economy. This phasing builds a strong basis for growth with high predictability. If you are trying to invest into infrastructure just when you are at the peak of the curve you are eating into already strained resources.
I would like to focus on Business Analytics. The argument is that by understanding your business through the data that you generate on a daily basis you are more efficient and better equiped to re-engineer your company for competetive edge. It’s the same as with home improvements… if you don’t know what you are fixing, don’t try to fix it (this is from recent personal experience). With BI you can argue that with a better understanding of your operations you can fine tune your processes for cost efficiency. I would rather emphasize the fact that by understanding your business better you can re-engineer it for competetive edge. Recession doesn’t stop sales, but increases the fight for the reduced volume. The companies that understand their vertical and business will fair best in the fights and they will come out strong from a recession.
A good measure of a management team is whether they excel in a recession.