Recession planning 101 for CIO's

Implications: 1. Proactive strategies for cost reductions are better than reactive. 2. Communication about the current realities is critical to your staff

Analysis: The new year has arrived and CIO's are examining their current budget patterns.  I belong to a group of CIO's and the general consensus was 2008 will be flat to +2% over 2007.  But many of the CIO's were preparing for potential cuts if needed.  This is consistent with the article I have referenced.  I should remind the readers that this group does not include anyone from residential real estate or other housing related industries.

I would like to add to some of the ideas in the article in two different ways.  First, I would suggest that this year might be a good chance to look at cost saving projects,  Second, this is a good time to include your staff.

These are often years when it might be wise to look at your vendors and see if you can consolidate some of them.  Often you can give more business to fewer of your vendors and get a net savings.  This strategy is more along the lines of following a "good enough" strategy instead of a best of Breed strategy for your solutions.

This could also be a great year to renegotiate some of your contracts and move them to 3 year deals.  This has some risk in that you might miss out on future savings.  But it could also be a simple solutions to save a couple of percentage points this year given the estimates of this being a slowdown or a mild recession.

I also think this could be a year to look at a different strategy of outsourcing.  It might be time to determine what is core to IT and what is best done by others.  Small to medium business might want to outsource production support as compared to having multiple shift coverage.  I think the years of saving a ton of money with staff augmentation offshore are lessening, but strategic changes will still occur.

But by far the most important point I would like to make is to include your staff in these decisions.  Be sure to challenge them to finding good strategies.  They are closer to many of the issues and will probably do a great job.

This will also create a sense of teamwork in your organization and a sense of clear communication.  For those top people who you do not want to be nervous, bring them in to have them help you solve any budget issues.  In this way you can put your best people on this problem and probably find the best solutions with little or no impact to staffing.  And even more importantly, your staff will hear the facts from you, not from standing around the water cooler.