The recession is taking its toll on the mining and manufacturing industry and companies are taking unprecedented steps to protect their businesses. Today, the CIO in a struggling manufacturing company simply has to do more with less.
This is the opinion of Gavin Halse, MD of ApplyIT. Halse explains that scarce IT resources in manufacturing have become even scarcer as IT companies seek new, potentially more lucrative lines of business that are less impacted by the manufacturing downturn.
Halse says manufacturing CIOs who are now faced with the task of radical cost reductions may be tempted to cut IT down to an absolute minimum. However, the relationship between IT and the business is important, he warns.
“When cutting costs, be careful not to damage the IT relationships that truly create value in your company,” he adds. “Changing vendors as a result of contract termination or radical downsizing can take a long time, and cost far more than may at first be evident.”
Rather negotiate with your IT partner a sustainable reduction in IT costs and scope of services, advises Halse. However, he warns, “If you cut the revenue stream too radically, you may just end up forcing the partner to go elsewhere, leaving you with the substantial costs of initiating a new relationship at the worst possible time.”
Cut costs in the IT commodity area, and keep investing in the IT differentiators, Halse advises. “Bandwidth and connectivity and cheaper hardware are areas where cost savings can be achieved, often with improved quality and service levels,” he offers.
“However, be very careful when planning cutbacks on application support, system development, and line-of-business applications such as ERP and CRM, which are fundamental to successful manufacturing. If you cut back these areas too far, it may result in your breaking the delicate, complex, and integrated software application ecosystem that your business relies on. And rebuilding these systems may be more than you can afford for a long time,” continues Halse.
Finally, Halse advises manufacturing CIOs to adopt a long-term perspective. “The economy will turn again. It is a consequence of a connected and informed global economy that things will change quickly.
“For the successful CIO, the downturn can be managed through applying the same care and strategy that has seen you survive the post-Y2K fallout. You already know the recipe for success,” concludes Halse.
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