The global economy is at a crossroads, with Europe reporting an especially difficult environment, and SA could follow. Local companies have been urged to plan for this, using tools such as IT service management (ITSM) to help them weather a second economic storm.
Gill Marcus, governor of the South African Reserve Bank, says there was brief euphoria following the news that economic recovery was well under way; but this has been replaced by greater caution.
She warns some analysts now see a double-dip as a likely scenario, adding: “the reality is we probably never really emerged from the crisis, which is now entering its next phase”.
Russell Steyn, MD of Foster-Melliar and director of itSMF SA, agrees: “Yes, there is a chance. If one follows the information out of the G20 and certain economists, things are not 100% on track for a full recovery just yet.”
He warns that whether it is historical or coincidental, SA still sees a six- to 12-month lag behind the rest of the world. “SA is experiencing a very mixed set of economic emotions fuelled by a successful hosting of the World Cup, increased public sector spending, and a slight upturn in the housing market for the six months to June 2010.”
ITSM's role
“Let's face it - ITSM [alone] isn't going rebuild the economy,” says Steyn. “Where ITSM is beneficial is its ability to underwrite just about any situation. In a recession, ITSM allows you to focus on doing more with less - retrenchments, budgets, and so on.”
David Cannon, ITSM practice principal at HP, says when the economy is down, business starts to look not just at cutting costs, but at gearing up or changing services. “They move away from the top-line and luxury services and focus a lot more on the budget services.”
According to Cannon, in every business, customers demand more lower-cost services or products. “This impacts IT in terms of the way IT services are geared to spending more money and getting a higher quality of service; the business is saying 'if we're moving from deluxe to cheaper services, how is IT going to help us do that?'”
Cannon says financial management is one way IT can link what it does to what business is trying to achieve, and ensure any investments it makes supports the business.
“Simply put, as the business adapts its services to deal with the higher demand on economy lines of service to IT, it has to adjust its business to meet the changes.”
Steyn adds that during recovery, ITSM allows the ability to strategise and plan, while recruiting, growing and educating teams. And during booms, it allows companies to drive efficiencies and tweak profit margins.
No second chances
Gartner analysts have highlighted the potential double-dip, stating that CIOs need to be prepared to weather any potential financial storms. It adds that if another recession unfolds in the next 12 to 18 months, no CIO will be forgiven for being unprepared the second time around.
"Just the potential for a second business downturn should be sufficient to compel CIOs to plan for another business downturn," says Ken McGee, vice-president and Gartner fellow. "However, most CIOs will not have a response strategy prepared if a second business downturn occurs," he concludes.
How ITSM can be used to weather economic downturns will come under the spotlight at the upcoming Service Management Conference and Exhibition Africa (SMEXA) on 3 and 4 August at The Forum, in Johannesburg.
SMEXA 2010, hosted by ITWeb and itSMF SA, is themed 'Mapping routes to recovery', and will include talks by David Cannon and Tom Scholtz, Gartner VP for research.
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