Take, for instance, what is currently happening in Canada, where many businesses face economic uncertainty. The devastating wildfires in Alberta are expected to cause Canada’s economy to contract by at least one per cent. Combined with a volatile market, an unreliable dollar and weakened manufacturing sector, it’s understandable that companies may choose to make budget cuts or wait things out.
However, cutting back too hard on technology investments can have a devastating effect on the future of a company.
Outdated technology will soon become obsolete
Technology is not fixed; it continues to evolve, improve and adapt. Maintaining investments in IT departments ensures that a technology infrastructure is prepared for new software and devices introduced into the workplace.
If CIOs and IT departments are not vigilant with system maintenance and upgrades, they could be putting a company at risk of having to ‘rip and replace’ the entire system in years to come as legacy infrastructure may not be able to function with newly released systems and applications. Replacing entire systems can be far more costly than simply making regular updates. This can burden cash flow, slow company growth, affect employees and limit offerings to customers.
You risk your competitive advantage by not investing in IT
While competitors may be experiencing the same economic challenges, it can’t be assumed they’ve also chosen to halt investments. Technology offers a competitive advantage through a multitude of benefits that can help set organizations apart from the competition.
This is particularly true with a remote workforce. According to Nathaniel Koloc, co-founder, and CEO of ReWork, companies that officially allow employees to work remotely at least three times per month are more likely to report revenue growth of 10 per cent or more within the last year, compared to firms without. Through mobilizing its workforce, an organization can reduce real estate costs by streamlining office space as well as get an edge up on the competition, as enabling employees to be more agile in their delivery of work can lead to improved customer service. Mobile technology also allows organizations to hire the best candidate for the role – regardless of their location. These organizations can embrace ‘virtual employees’ that use cloud technology to work anywhere in the world as though they were in a traditional office.
As more time passes, a flexible work culture is continuing to become an employee expectation rather than a work perk. According to a recent Citrix survey, three-quarters of Canadian employees believe businesses should offer the ability to work remotely and 45 per cent of employees would make a trade off in perks, hours or pay at their current job to work outside of the traditional office setting. Not offering this ‘perk’ could turn off potential candidates and affect employee retention.
The hidden costs of not investing could be steep as turnover alone is estimated to cost roughly 150 per cent of an employee’s salary. Losing talent to the competition could have lasting effects long after the economy has bounced back.
Strike the right balance
At the end of the day, everything hinges on the bottom line and sometimes, cuts have to be made. However, there are ways to cut back without crippling IT. It’s important to evaluate the necessities and focus investments around what will sustain the company during an economic downturn.
Consider the immediate investment against the potential cost of not investing to make smart choices. For example, if IT pays for software updates but doesn’t invest in regular maintenance, the spending is likely ineffective. Also, consider where the company plans to be rather than where it is now. Ultimately, if a CIO is not planning with tomorrow in mind, when the economy does bounce back, the company is playing catch up rather than hitting the ground running.
Remember that doing nothing is a decision, and with any decision, there is a risk. By choosing action over status quo a company forces itself to look to the future.
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