March 9th 2020 - The purpose of this blog is to reflect the thoughts of EkaLore partners (and a few fun guests) on current topics and events that affect enterprises, global perspectives, and deeper thinking. The folks at EkaLore are generally experienced heads with lots of time to have “been there, done that, seen what happens”.
Our partners have seen multiple waves of tech fashion come, go and return again as "new." The goal of this blog is to reveal some of our collective knowledge and thinking around getting business accomplished with Enterprise IT.
What follows is the first in a series of posts from our lead analyst -
The current events have many talking heads and opinion posts around: 1) Covid-19 possible pandemic 2) East-Asian trade issues (Japan-Korea, Chinese Tariffs, Changes in global supply changes) 3) Mega trends (5G deployment, colossal compute/data/web, algorithms like AI, global demographics) 4) Global equity markets falling hard
For today, let focus on what happening in big enterprises (including government, medical, academic institutions, and non-profits – besides large commercial companies, utilities, transportation companies, and data dependent companies).:
A month ago, when the Corona virus first was in the news, my first thought was, “The Chief Financial Officers just stopped all capital/one-time spending because they can.” Last Monday, when the stock markets were dropping big, my next thought was, “The Chief Financial Officers just asked for monies back from each group.” Having been in publicly traded companies, I've observed CFO’s moving to preserve cash and protect the dividend, even if just a quarter or two, to ride out problems. What does that mean for Enterprise IT?
Even before the Corona Virus and the stock market correction Enterprise IT has had to deal with:
Tight Budgets that are only increasing 1-3% (about GDP Growth)
Increased costs for security, changed infrastructure and talent
Expensive (and highly risky) new developments for Artificial Intelligence (AI), new Analytics, and improving experiences with IT applications
Driving out data center costs (and moving to expense line items instead of capital budget/fund)
Enterprise IT is commanded to:
Do more with less (by driving out costs with cloud, etc.)
Improve security (usually by a lot)
The problems for enterprise IT is that many costs are functionally fixed:
The long term contracts for cloud/off-site capacity
Costs for on premise systems and maintenance (often required by regulatory)
Talent costs for core operational, supervisory, and management staff
Operations costs for compliance, audit, and regulatory records
The push in recent years has been to force as much as possible to outside contract costs (outsource, talent from staffing firms, process outsourcing for Enterprise IT). This also means the budget items are more akin to ‘fixed costs’ than flexible.
Four common ideas to cut the budget - What to do about doing more with less in the Enterprise IT budget?
Get rid of people now! - During a serious budget push, that is a common idea in Enterprise IT. The question what is a good idea on how to cut people in Enterprise IT. Here are the most common ideas:
1. Cut the most expensive experienced people. This is usually not a great idea. These are the people who have the most “know-how in their heads, not written down’ and who know how things really work in infrastructure, applications, and architectures. Past studies (use the contact form below and I will send them along to you) have shown these are also the people who are the most productive – by big margins.
2. Cut the newest people. This goes along with “stop all hiring”. Yes, many new people don’t contribute lots until they’ve worked in a shop for a while. The counter-problem is that so many “boomers” are getting to retirement (and taking it!) that some hiring is needful. The other problem this creates is a ‘notch’ some years out where there are some very senior folks, and some in the middle, but managing the clumps is a problem.
--come back tomorrow for parts 3 and 4 of the most common ideas on how to cut people--
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