Posts Tagged ‘recession’

CIOs Need To Use Lessons Learned During The Dot-Com Crash To Do Well Now

Wednesday, June 23rd, 2010
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Cisco Has Some Lessons For How CIOs Need To Exit The Recession

Cisco Has Some Lessons For How CIOs Need To Exit The Recession

When you become a CIO, you will have the chance to be leading the IT department when the next global recession hits. I don’t care if you’ve got a list of Cisco technical certifications as long as your arm after your title and the fanciest MBA degree available, there’s no training for how to deal with this. Good news: the folks over at Cisco are in the process of blazing a trail that will show CIOs how to deal with this type of situation.

What Cisco Did During The Dot-Com Disaster

Everyone knows that Cisco is a huge company that is now and has been quite successful. What we’re interested in is how they’ve been able to survive the past two dramatic industry recessions – the dot.com event and the 2009-2009 global recession.

The fact that they made it through the dot.com technology downturn means that Cisco came into the most recent downturn with a lot of experience. It’s what they did back then that can help CIOs figure out what they need to be doing today.

Back in 2001, Cisco’s leadership made the difficult decisions early on. In March of 2001 they decided to roll off 18% of their workforce. Because they made such a big cut early on, Cisco didn’t have to make any additional cuts during the entire dot.com crash. There’s something for CIOs to learn from this.

When the dot.com crash had passed through its darkest days and a small glimmer of a recovery started to become visible, Cisco got aggressive. What they did was to start to make investments in new businesses that they thought would be significant markets.

Although as CIO you might not be buying up other companies, the idea of starting early on projects that are going to make the company stronger as you come out of the recession is something that can make or break your CIO career.

What Cisco Is Doing At The End Of The Current Recession

Cisco says that the #1 thing that they learned from the dot.com downturn that they are applying today is that they need to move quickly. They say that back then they spent too much time looking at how dismal the current market was and not enough time looking forward at how the market was going to be in the future.

For CIOs this is a key piece of advice. Since you’ll be rubbing shoulders with the CEO and CFO in your CIO position, you’ll be getting a lot of negative vibes during the recession. It will be your job as the company’s technology leader to rise above the doom & gloom and set your sights on what’s coming your way once the recession is over.

There are tactical things that you’ll be able to do also. Hopefully it goes without saying that if you are able to keep your IT team together, then having an experienced team on board will make getting through a recession that much easier. At Cisco they’ve been able to keep 45 of the 65 executives who were with the company during the dot com days still on board.

Additionally, freezing hiring early on will make it that much easier in the event that you need to do some downsizing – there will be fewer heads that need to be cut.

What All Of This Means For You

If the world was perfect, then when you became CIO the company would have nothing but smooth sailing ahead of it. Clearly this is not the world that we live in.

There will be another recession and with a little luck you’ll be a CIO by then. In order to make it out of the recession stronger than when you went into it, you’re going to need to take action. This means doing the right size downsizing and knowing when to start the projects that will position the company to be successful when the recession is over.

It is possible to hold on to your CIO job even when the global economy is not doing well. The folks over at Cisco seem to have come up with an approach that CIOs would be well advised to follow!

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills

Question For You: Do you think that laying off large amounts of your IT staff just once early on is better or worse than multiple smaller cuts over time?

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What We’ll Be Talking About Next Time

What if software was free? Every CIO has to stop and ask themselves this question every once in awhile. With the cost of ERP and database systems constantly increasing, software costs can quickly become a significant expense for any IT department. The “Open Source” software movement, born in the days when Napster was giving away commercial music for free, is one way the IT departments can get high quality software for free. But should they?

CIOs have a difficult decision to make when it comes to using open source software: do they risk using software with no formal support in order to cut IT costs

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Posted in business advantage | No Comments »

Cisco’s John Chambers’ Recession Tips For CIOs

Monday, August 10th, 2009
John Chambers Knows How To Survive A Recession

John Chambers Knows How To Survive A Recession

It can be a long and lonely journey through a recession for anyone, including CIOs. The company’s very survival may be at stake, the CIO’s job may be at risk, and of course there is that big unanswered question about what needs to be done to prepare for life AFTER the recession is over. Maybe Cisco’s John Chambers can offer us some insights…

Who Is John Chambers?

Michael Malone over at the Wall Street Journal had a chance to sit down with John Chambers and ask him for some guidance  for how CIOs can make it through these troubling times.

Just in case you don’t know who John Chambers is, he’s the CEO of the computer networking giant Cisco. Roughly 3/4 of all Internet traffic is estimated to run over Cisco gear and if you own a LinkSys router in your home or use one of those little Flip digital cameras then you are a Cisco customer.

John Chambers was at the helm of Cisco when the tech world really took a dive back in 2001. When he talks about what CIOs need to do to survive the current downturn, he knows what he’s talking about…

Chamber’s Suggestions For Surviving A Recession

John Chambers has a playbook that contains four key elements for how to survive a downturn. The playbook has been created based on years of experience in the tech industry and having had a chance to watch once great companies fall by the wayside. Here are Chambers’ key points:

  • Be Realistic: All too often CIOs like to pretend that the challenges that they are facing are all caused by the current economic situation. In reality, it’s more often a combination of what’s going on in the market as well as challenges that they are creating internally. Being able to realize that these are two separate groups is the first step in coming up with a plan to deal with them.
  • Assess Your Situation: When  a CIO discovers that a recession is starting to happen, he/she needs to ask themselves how long they think that this is going to last (they always end eventually!) and how deep it’s going to be. The answer all too often turns out to be that it’s going to last longer than you anticipate and be more severe. Knowing this you can create plans that will see you though the entire downturn, not just some made up short period of time.
  • Get Ready For The Upturn: This is the part that so many CIOs miss – all recessions eventually end. Although the ability to do a good job of cutting costs will help see the company through the recession, it’s the ability to position the IT department to help the company burst into the lead once the recession is over that will prove a CIO’s true value.
  • Get Closer To Your Customers: You would think that this would have always been on Cisco’s list, but Chambers admits that it was added only after the 2001 recession. The closer that you are to your customers, the sooner you will realize when a recession is starting because you’ll see the pain that they are starting to feel. This helps you to react quicker and better.

Final Thoughts

In an era in which firms seem to go through CEOs like copier paper and in a region of the county, Silicon Valley, in which there are very few survivors, John Chambers has not only survived, but he has done a great job of thriving. His experiences with multiple recessions provide a great lesson for all current and future CIOs who want to help their companies to grow quicker, move faster, and do more.

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What We’ll Be Talking About Next Time

The very first baby boomer was born on January 1st, 1946. Soon after that a LOT more baby boomers were born. This generation of workers is just now reachingretirement age en-mass. With the possibility of having a large group of experienced workers leave the workforce all at once, should CIOs be worried?

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Posted in recession | 5 Comments »

We’re In A Recession, What’s An IT Department To Do?

Thursday, January 1st, 2009
It's Not A Depression (yet), But IT Departments Need To Make Changes To Deal With The Recession

It's Not A Depression (yet), But IT Departments Need To Make Changes To Deal With The Recession

Remember what happened to the IT industry back in 2001? When the dot.com bubble burst, pretty much the sky started falling and IT spending hit the proverbial brick wall. If you’ve been reading the newspapers or watching TV lately, then you’ve probably noticed that the global economic downturn sure looks like what we saw back in 2001. Should an IT department be worried?

The good folks over at Forester Research have just released a forecast for 2009. When they looked into their crystal balls, they saw that in 2009 IT spending will grow at its lowest rate in the past six years.

IT spending will actually still increase just a wee bit – it will grow to be 1.6% more than they spent in 2008. This will be a change from the past two years because IT budgets had grown by 4.1% and 7% in 2007 and 2008.

The reason that IT budgets will still grow just a bit in 2009 even though the rest of the world is shrinking is because the world has changed – businesses have grown so dependent on IT that they can’t help but spend as much or more than they did the year before.

For those of us who remember the dot.com crash (myself included), we shouldn’t be too worried about IT spending taking the long lasting nose dive that it did back in 2001.

The reason that things are different this time is because back in the dot.com days firms had overinvested in IT systems and staff. The thinking is that this time around IT departments have been running a much leaner shop for the past few years and so they won’t have to cut as deep as other departments may have to.

So what’s an IT department to do in this down cycle? Focusing on helping the firm to cut costs is one way that IT can help now and build good will for use later on.

A relatively simple project to consider is switching your corporate email system from an in-house system to an external on-line provider. Yes, email is a critical business application; however, it’s not unique to your business. Having your expensive IT teams spending time on keeping the email system up and running is taking away from other business specific work that they could be doing.

If your business is the creation and selling of software products, then you should be cautious going forward. Forrester’s study found that software revenue is predicted to grow at only 3.4% in 2009. Additionally, most of this growth will be coming not from new product sales but rather from support fees from previous purchases of software.

What everyone needs to realize is that right now nobody is spending any time planning for the future. This is a luxury that IT departments cannot aford to take. When the global economy snaps back, IT is once again going to be expected to start driving company profits!

What steps are you taking to prepare your IT department for the recession? Have you identified any cost cutting changes that you could make that would yield big savings? Have you considered having an external firm handle your email? Leave me a comment and let me know what you are thinking.

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Posted in business alignment | 2 Comments »