Whether it's a correction, a slowdown or a full-fledged recession, one thing is certain: The economic outlook is anything but rosy. And even though no one wants to talk about it, the slowing economy is affecting everyone, even IT managers and their staffs.
True, IT budgets are often the last to be trimmed. Research from Stamford, Conn.-based Meta Group Inc. indicates that IT budgets will continue to increase this year, just not as fast as before. Budgets that have been growing by about 8% to 10% annually might grow 5% this year. Even so, it can't hurt to prepare for the worst.
Business Alignment
James Lapomardo, senior director of IT at PictureTel Corp., a manufacturer of videoconferencing systems in Andover, Mass., says he has mixed feelings about the cooling economy and the impact it's having on IT.
His company isn't suffering like other technology companies, particularly dot-coms. Many high-tech companies in Greater Boston, which is the No. 2 high-tech market in the country, have been hurt by the downturn.
Nonetheless, Lapomardo has definite thoughts on what IT workers should be doing to weather any rough seas ahead. He points to the example at his own IT organization, which has experienced dramatic reduction.
In the past nine months, Lapomardo's staff has gotten leaner and more efficient, dropping from 65 to 40 employees due in part to a centralization of IT functions and elimination of IT overlapping director-level positions.
IT was centralized for several reasons, but the primary one, according to Lapomardo, "was to gain back certain synergies from what used to be a centralized IT organization."
During the consolidation, the IT department found several overlapping areas such as duplicate hosting agreements, similar support contracts and duplication of job responsibilities. Much of the overlap was eliminated through attrition.
The key, explains Lapomardo, was putting "IT in lock step with the business." He recommends realigning IT with the business by asking questions such as, "What are your company's current strategic goals?"
"Strategy is ever-changing, and what is right in one cycle is certain death in another," Lapomardo says.
Once you've done that, it's essential to evaluate your current IT staff as it relates to the business strategy. Do you have the right team in place, or have you amassed certain legacy skills that can't make the leap to the new priorities? Are you willing to outsource?
Although Lapomardo's employees have top-notch technical skills, he says some of them needed to work on their business skills. For example, Lapomardo is helping a client manager with a strong technical background transition into a more client-services-oriented role, where he serves as the liaison between IT and business.
"I've been working with him to hone his client-management skills because he already has the technical skills," Lapomardo says.
"Staff alignment comes only through analysis of what the end result has to be," he says. For example, he explains, if you intend to base a better part of your strategy on e-commerce, determine what skills you need and whether the work is to be done in-house or outsourced to an application service provider. "Be prepared for both, since the financial case may make the decision an easy one," says Lapomardo.
Jerry Carlsen, CIO at Friedman, Billings, Ramsey Group Inc. (FBR), a financial services firm in Arlington, Va., says to avoid budget and staff cuts, IT departments must align their activities and projects with the revenue side and the overall business plan.
"In fact, [if] activities [aren't] directly or indirectly linked to revenue generation, revenue enabling or, at a minimum, expense reducing, the activity should not be pursued. The exception to this is required infrastructure improvements and activity required for daily operation," Carlsen says.
When Carlsen joined FBR, he met with all his employees individually and then built a matrix to measure staff against various criteria, including customer interaction skills, technical skills, project management skills, team orientation and willingness to learn. He then aligned his staff with business initiatives such as revenue targets for different business lines.
"This direction then needs to be communicated to all IT staff, as everyone needs to be moving in the same direction to be truly effective," Carlsen explains.
Retrain, Reprioritize, Reduce
Carlsen says he has yet to feel the impact of a cooling economy. But if his team encounters rough times, it will be prepared as a result of that focus and business alignment exercise.
This also means implementing team dynamics and exploiting "more of a project-and-results focus to drive compensation." Everyone in IT at FBR will be measured on results, notes Carlsen.
"Teamwork and focus are the first two critical elements to building a more highly skilled organization," he says. "There may be group managers, but the people working for them may be working on various different projects at a given time. This builds a more highly skilled organization.
"The [next] is implementing project management disciplines," Carlsen adds. "This is how I'm preparing for leaner times, putting together teams and disbanding teams as needed."
Leveraging the staff you have might mean training, reprioritizing or eliminating obsolete tasks altogether. However, Carlsen cautions against asking someone to do something for which he isn't qualified.
"Either retrain someone who you know can make the leap to the new role, or recruit the right person for the job," and keep your specialized jobs specialized, he says.
"If you have an Oracle [database administrator], don't ask them to do NT administration just to get the most out of them," Lapomardo says. "There are always going to be jobs you cannot combine or make any more efficient. If you have someone who you feel is not being fully utilized, maybe that job can be contracted or outsourced, since it may not be a full-time responsibility."
On the other hand, Carlsen warns that relying too heavily on employees with specialized skills is a recipe for disaster. "Don't rely on one person knowing a job," he says. "Cross-training is crucial. Primarily, people are in training classes that give them greater breadth of information. Now, instead of having one person that knows all about network engineering or security issues, there are several. This also adds a learning element to the job that keeps IT people engaged."
Then, Carlsen says, go for quality over quantity. "A 12-person team can be as effective as a 22-person team if the right individuals are on that team."
At the United Negro College Fund in Fairfax, Va., CIO Vida Durant knows all about doing more with less. She says tight budgets and limited resources are de rigueur—slowing economy or not. If anything, recent layoffs are expanding the pool of job candidates that Durant and other IT managers at nonprofits can choose from.
"In a nonprofit, you have a social mission," says Durant, "so your whole goal is to minimize operating expenses." Sometimes, this means investing in technology such as desktop video conferencing to cut down on travel expenses or implementing customer relationship management systems to enhance efficiency.
Other times, it means making do with fewer full-time staffers and hiring consultants as needed. And Durant says everyone who works for her has to be able to perform multiple tasks. "They are normally responsible for two or three different areas," she says.
Training Isn't Optional
Most of the IT managers interviewed for this article agreed that training is one of the best ways to stretch staffing resources.
"I don't think the issue is keeping training costs down as much as it is 'What training can be done to make IT departments recession-proof?' " says Susan J. Goldberg, president of Northeast Training Group Inc. (NTGI), an IT training consultancy in Chestnut Hill, Mass. "Any training that allows people to focus on systems that reduce cost helps to make them recession-proof. When business and the economy are down, it is important for IT to have shorter delivery cycles."
Training in practical applications such as rapid application development and cost/benefit analysis will help IT in a down economy, says Goldberg.
Training is a great incentive and morale booster for star employees, says Lapomardo.
"No, you can't be reckless in your spending, but you can make training available to those individuals that you know will benefit the corporation by training them," Lapomardo says.
"Too many times we train people to keep them happy, when in the long run they end up putting it on their resume to get their next job. Make training something that people earn because they have shown a good work ethic, enthusiasm and provided real value to the organization."
Although training is important, it shouldn't be used to retain employees who don't want to be there in the first place. "You shouldn't adopt a 'pay-to-stay' policy," says Lapomardo. "Engage people who want to be there and provide value to the corporation."
Carlsen uses training to get the most from his staffing budget. "We want to retain our best people, and one way to do that is to provide aggressively for professional development," he says.
Always on the lookout for cost-saving measures, Durant says she keeps her training budget manageable by taking advantage of online training opportunities. She uses training offered by NTGI and local training providers whenever possible to keep travel expenses at a minimum.
Some IT managers and staffing experts agree that the slowing economy may have a positive outcome in the long run.
Candi Dalipe, a principal at Philadelphia-based Banister International, says that because of the slowdown, IT managers are able to do without people who weren't as skilled as the manager would have liked but "were brought on because they needed bodies."
Dalipe says IT managers who are trying to keep employees positive and improve morale in these uncertain times should encourage employees to proactively seek ways where IT can assist in driving down costs.
Dalipe also recommends that IT managers be as upfront as possible about potential layoffs. "That way, employees don't feel like they are in the dark and are always waiting for the ax to fall," she says. "It is critical that managers have an open-door policy so that employees feel like they can address concerns, especially if the company has had recent layoffs."
Cohen is a freelance writer in Washington.
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