Pandemic, war, inflation, supply chain disasters, soaring energy costs, staff shortages, and now recession… As business leaders, it feels like we’ve been dealt one blow after another. How can we get through these challenging times in good shape? In this state of permacrisis, our instinct is to scale back, stop spending, make cuts. Without question, we will need to make some tough decisions, and never before have our entrepreneurial skills been so tested. But there are still ways you can roll with the blows and recession-proof your business.
The IT budget is one we can’t ignore. It’s a sizable cost. The temptation is to maintain or reduce spend; avoid investing in new, more or better. The reality is, technology is the single biggest growth enabler we’ve got. The right IT investments and good practices in IT governance will help us navigate the choppy waters ahead. Here are a few ideas that should help you through the tricky business of budgeting for IT in a recession, trim the fat and invest for growth.
Most business owners we speak to don’t know how much the total cost of ownership is for their tech stack. The first step to recession-proof your business is to stop unnecessary costs. Start by scrutinising your licensing and payments over the last year and look for wasted expenditure. Work with your service provider to do a thorough review of what you’ve got and why you need it. If you are investing heavily in licenses, consider ways to spread the cost by switching to monthly subscription plans. In a state of permanent flux, you need to look for flexibility in our contracts so that you can quickly scale up or down as we need to. Evaluate the options.
If you haven’t done so already, make an inventory of your assets and look at those nearing end of life. Remember that your staff need to have the right tools to work productively; scaling back on workstation upgrades can be a false economy. If you are still running on-site servers or have tenancy at a datacentre, it really is time to consider a move to the Cloud. Money that you spend maintaining this physical infrastructure could help fund a move to the Cloud, and your business will emerge from the recession in a far better place.
Remember that IT is your enabler for growth. At a time when you expect revenue to take a hit, technology is the one big thing that can protect profits and potentially fuel growth — but we can’t invest in everything. Here are some ideas that might help you decide what’s mission critical and what can wait:
The average length of a recession is 13 months, so we need to prioritise the IT projects that are critical during this time. Factors to consider might include cost, speed of ROI, and any other advantages the project might bring, for example, improved productivity, competitive advantage, staff retention or customer loyalty. If you can find ways to quantify these merits, it will help you get your priorities in the right order. Risks, cashflow and resource planning should feature in the process.
It sounds obvious, but often projects get dismissed or deferred because the benefits are not obvious. Thinking about the lost opportunity can give you a clearer perspective.
Building the case for their project will encourage department heads to thoroughly evaluate its merits and articulate the rationale. When times are tough, we need our budget holders to spend like it’s their personal reserve. Giving a green light to a proposal under these tough times underlines the need for it to be well scoped, implemented on time and on budget, with quantifiable returns.
The top three areas to invest in when trying to weather the storm are improving operations, measuring performance and keeping the business secure.
If a manual business process is time-consuming, frequent and is prone to human error, it should be automated. There is no good reason not to. Low and no-code automation tools from Microsoft are designed to be citizen led. This means that our staff can use these tools themselves to improve their productivity without the need for expensive DevOps investment. Download our guide to business process automation for SMEs and find out all you need to know to get started on replacing manual processes with digital workflows.
Being able to measure what matters for our businesses gives us a clear line of sight over all of our KPIs. Tools that can capture high volumes of data and visualise this in real time help us to see where our performance gaps are. If you are interested in finding out more about the new tools in Microsoft Power Platform that offer advanced business analytics, you can find out more here.
It is essential not to ignore our security when times are tough. As the cost of living crisis begins to hit consumers and businesses alike, so cybercrime increases. No less than 39% of UK businesses said they had suffered a cyberattack in the past year, according to the government’s Cyber Security Breaches Survey 2022. While the figure is consistent with the previous year, the effectiveness of the attack is on the rise. In lean times, we can’t afford to lose something that is somewhat within our control. A continued investment in security measures is critical to survival.
Underinvesting in IT during a recession has its drawbacks. If we do nothing to attract new business, improve operations or protect the company, we don’t just stagnate, we decline. There is never a time to hibernate and, hard as it seems, we need to battle through recessions making good decisions about our investments for security and growth.