09 Mar 2012

How can IT help in a slowing economy?

There’s a lot of talk about two-speed and slowing economies, with warnings of a new economic crisis brewing in the Eurozone.

Understandably, many businesses are therefore wary about investing in new projects at the moment – preferring instead to conserve their reserves as part of a wait-and-see approach.

That’s sensible. But when it comes to IT, I think it’s also worth pointing out two things. Firstly, the investment equation for IT projects is not what it used to be, because many are now achievable at very low up-front costs. Secondly, many IT systems have the potential to help businesses cope with lower demand, while also preparing them to take advantage when strength in the economy returns.

What help can IT offer when demand softens?

When credit was tight and capital was at a premium during the GFC, businesses prudently held off on many IT projects because of their capital cost.

What’s changed since then, however, is the coming-of-age of cloud technologies. From simple Microsoft Exchange services to entire infrastructures, cloud solutions mean that the once burdensome up-front costs of many IT projects are now minimal – allowing businesses to invest in new technologies while protecting capital.

What to invest in

As I’ve written before, IT presents powerful opportunities to reduce costs and boost productivity. Both of these are keys to improving the bottom line when external economic conditions aren’t favourable. Some technologies you might consider include:

Virtualisation

If your business has not outsourced its servers, virtualisation is a must. Using virtualisation to host several virtual servers on the one physical machine, you can reduce your server costs by anywhere from 30 to 70 per cent. The most common virtualisation solutions are delivered through systems from VMware, Citrix or Microsoft (Hyper-V) and your IT provider will be able to design a solution for you.

Infrastructure

If your servers and desktops are in need of a refresh, you should think about moving them to the cloud. For most, this will make more sense than spending a heavy amount of capital on a new internal platform. Should times get tough, there’s also the benefit of flexibility – the chance to dial your services down if you need to should business activity slow. If you’ve invested in an internally hosted platform, that option won’t be available to you.

Anything in the cloud

From ERP to CRM systems, anything hosted in the cloud is likely to deliver the same if not better service than an internally managed system, but with the added benefit of the cloud’s commercial model, which emphasises operational costs and scalability. Software provided via the cloud also typically offers businesses the chance to stay up to date with the latest versions and features without having to pay additional fees, purchase licenses or manage the upgrade process.

Summing up

By taking advantage of the cloud’s emphasis on operational as opposed to capital funding, businesses can continue to invest in systems that will reduce their costs and improve the way they do things – even when it’s imperative to keep hold of whatever capital they have.

Those who can maintain a technological edge over their competitors will also be in an enviable position to seize the moment when economic conditions improve.

Dave Stevens is MD, Brennan IT

(This blog post was first published on the SmartCompany website on March 08 2012).

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