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It’s the Economy

By David Rayner | Jun 30, 2010 | Business, Insights

The full phrase, penned by Democratic strategist James Carville, “It’s the economy, stupid” helped then candidate Bill Clinton shift the focus of the US electorate away from an immensely popular sitting president and his success in foreign affairs to the quandary of ordinary Americans as the US economy began to slip into recession. Fast forward almost 20 years, narrow the focus to the world of business and the Information Technology that supports it and the cry is still relevant…it’s the economy. However in 2010 the direction of the economy is far less clear than it was in 1991, and it is this lack of clarity that makes our jobs in I/T exponentially more difficult. The good news is that while the challenge is the most difficult I have seen in 25 years in the I/T industry, there are new and innovative solutions that can help business leaders prepare to prosper in such uncertain times.

If you follow the business/political press, on consecutive days over the past week you would have read the following headlines: “Economic Growth Could Get Scary Good” followed by “The Mighty US in Five Stages of Decline”. You also would have seen articles about the US economy turning the corner as the recession ebbs away, transformed into a growth economy again and on the same day read about the $ 500B pension time bomb ready to dismantle the entire California economy.

If I am a CIO, trying to plan for the future of my business, what I am preparing for…”scary good” or “stages of decline”? I have followed economics and finance closely throughout my business career. I have never seen more well supported, rational, yet totally divergent expert opinions predicting the future of the US economy. Nobel economists argue equally convincingly that the economy is ready to rocket upward into a period of sustained growth or it is at the precipice and ready to fall off a cliff into deep and prolonged recession.

What does this mean for those trying to plan and implement I/T strategies for business? It means you have to do the seemingly impossible. You have to simultaneously prepare for lean times where efficiency is dominant objective and driving cost out of the business is paramount. At the same time, just in case those pesky bulls appear on the horizon, while you are driving the last nickel out of your operations, you also need to be ready to quickly stand up new capacity, new applications, and new functionality to meet potential rising demand.

So, I am a CIO mapping out the plans to support my business. Do I have to pick one of the prognostications and hope I am right? Is that really my best play? If this were the situation 10 or even 5 years ago, the answer would have been “yes”. Place your bet on the bull or the bear and hope you are right. The good news is that if you are right you will be the hero of the company. The other good news is if you are wrong, you probably get to move on to a new assignment, maybe at a new firm.

When you come to a fork in the road take it. Yogi Berra’s advice still rings true today. When you come to the fork in the road to build your infrastructure for massive efficiency or massive scale…do it. The great news for CIO’s and business leaders today is that you can. My advice for business leaders is to “go cloud” and “go virtual”. Specifically, determine what applications and data should remain resident in the organization and virtualize the infrastructure needed to support those functions. Everything else, put in “the cloud”.

Every business will be different in their mix of what belongs “in the cloud” and what should remain under the care of the local staff. However, the decision is not whether to execute on both of these strategies, but rather how much do I virtualize on premise in my private cloud and how much do I put in the “public cloud.” The downside to not deploying both of these strategies simultaneously will expose your business to the “pick” of a bullish or bearish economy, when in reality no one knows which will come to pass, but the direction could be extreme, hence your supporting infrastructure must be ready to support the extremes. Extremes have been anathema to I/T throughout our history and we are being asked to prepare for polar opposite extremes at the same time. In the year in which James Carville declared “It’s the economy, stupid”, I/T and business leaders faced with this quandary would have been relegated to making their best guess and hoping for the best. In 2010, while it is still the economy and it is the economy that is presenting us with this seemingly daunting challenge, technology solutions have evolved to the point where businesses can prepare for and thrive in the environment of unexpected extremes, but they can’t do it with last year’s technology solutions and they can’t do it after the tidal wave is formed on the horizon. Business and I/T leaders need to leverage the options before them now, before the economy breaks one way or the other, before extremes mandate options that are in reaction to, not anticipation of economic events.

The connection between economic events and the challenges in the I/T community has never been more evident nor more compelling. While I am certain that James Carville was purely focused on getting his guy into office, I don’t think a more sustained and prophetic phrase has been coined since. It is the economy. The sooner we in I/T recognize and leverage that, the better off we and the organizations we support will be. Let’s get to work…and keep your eye on the horizon, I am not sure if I see a bull or a bear…but one of the two is coming.

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