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McKinsey: Don’t cut IT in tough times!

Friday, November 14th, 2008

Managing IT in a downturn: beyond cost cutting The economy is in terrible shape. Most companies are looking to all departments to cut costs to stay viable. McKinsey & Company recently published a somewhat counter-intuitive study, Managing IT in a downturn: beyond cost cutting, that says you may want to spare the IT budget. In fact, it illustrates how targeted IT investments can increase profits in the short term and set the stage for long-term growth. In this article, McKinsey says:

“Except in the most dire circumstances, turning off technology investments during a downturn is counterproductive. When business picks up, you may lack critical capabilities. Besides, many technology investments can improve profitability in the short to medium term.”

One of the concrete examples they provide is in improving employee productivity:

“Another critical goal during a downturn is getting more ‘bang for the buck’ from employees — for example, by increasing a company’s operating scale, making processes more efficient to reduce rework, and stepping up efforts to automate manual procedures. IT is essential to all these efforts.”

See the full article here.


But what if there’s no cash to make an investment? You will want to keep your up-front capital expenditures to a minimum and retain maximum flexibility. Let someone else make the capital expenditures for you (hardware, software, software development, data center, etc.). Then buy this software as a service. Or, better yet, get it for free.


NextMark is committed to helping you get through these tough times and to come out of it stronger than ever. Despite the rough economy, we are ramping up our research and development investments on your behalf. How can we help you?