When it comes to managing your IT budget during a recession, it’s not as simple as just cutting costs. From hardware to software, and security to human resources, your IT and data security systems affect your whole business. You need clear ROI calculations–or ROSI (return on security investment), in the case of cybersecurity.
To get an idea of how a recession can impact your IT and security, we sat down with Corsica CEO Brian Harmison to talk about how businesses can prepare for an economic downturn.
How Is a Recession an IT and Technology Issue?
It’s really two-fold. The first issue is around productivity. What we typically see in a recessionary market is that businesses are willing to take a hard look at where their teams are spending time and alternatives to more expensive labor. Typically, that comes in the form of better investment in business technology around process automation, where companies are looking for new ways to engage technology that are more cost-effective and require less human capital.
This goes hand in hand with companies looking for innovative ways to sell their products and services online. Along with the desire to streamline the way the business operates by cutting down some overhead internally, we see businesses looking for new opportunities to engage with their client base, and that can be through things like ecommerce and other online platforms.
Take a lot of our manufacturing customers, for example. They’ve been operating in such a way that they’ve had customer orders outpacing capacity, so selling products hasn’t really been a challenge. In a recession, they’ll need to think of ways they can keep those product sales up, engage the sales cycle, and get more business in.
The second issue is security and the potential financial impact of a security event. The risk tolerance and financial safety net that a lot of businesses have during normal operations can be reduced during economic downturn, making businesses less expense-tolerant when it comes to expensive security events. The concern here is that if you are also reducing staff or making other technological changes to reduce costs, this creates a lot of new opportunities for bad actors to gain access to your systems. Which is why an increase in cyberattacks are seen during a recession.
The key for companies making these tough choices about budgets is to look at where your money is going when it comes to your IT and look for ways you can keep productivity and security up without increasing cost.
For Cost-Conscious Businesses, What Is the Advantage of Technology Modernization Now? Shouldn’t They Wait Until After the Recession to Make Any Major Changes?
Application modernization and digitization is a case of spending a little money now to save a lot of money down the road. And the road isn’t long. A lot of times our customers see a one-year return on investment when they choose to move forward with automation. So for a practical example, if you have a full-time employee dedicated to a task that can be automated, then the money you spend on automation is made up for in that first year, freeing up your full time hire to focus on other work, and eliminating an ongoing operational cost.
Can Technology and Software Upgrades Wait Until After a Recession When Budgets Are Restored?
There are some things you can wait on, and some things that are better to take care of today rather than putting off for the future.
We have clients that stretch the life of their laptops, workstations and other end user devices. But what it really comes down to is, what are the most critical things to keep your business generating revenue during a recession. Keeping the main systems that run the business up to date, under warranty and supportable with good backup strategies is not something that should change as the economy enters a recession. If anything, this becomes even more critical because most businesses will be less tolerant of revenue loss, so systems functioning as expected becomes a critical business issue.
How Can Managed It and Security Help Businesses Navigate a Recession?
First, managed IT can help you control costs. Many providers typically have a variable cost structure, so as your needs change, so do your level of support and associated cost. So, instead of having the fixed cost of, say, a full-time salary, your costs and support will be adjusted to your needs.
Also, there’s the factor of expertise and reliability. If you lose an in-house IT asset, your company is going to feel that in terms of loss of knowledge, support and productivity, not to mention the cost to hire and train a new associate and so on. With managed services, there’s never that interruption or downtime because you are continually supported by a team that are all experts. So, financially, managed IT can end up saving money and create a variable structure that can grow as you grow but also has the flexibility to scale back if you need to.
How Can Businesses Prepare for a Recession in Terms of It and Security?
It may sound strange, but the first place to start is with a security assessment. Where are you now with security? What holes do you have and how strong of a posture do you have? Because the stats can be shocking: 60% of small businesses go out of business after a security event. So, we must start with the foundational health of the business.
During a security assessment, we’ll look at all your technology and be able to make expert recommendations based on your current situation. We’ll outline the areas where you might be overspending and where you’re underspending to help you optimize your IT in a way that leaves your business secure and helps you be better prepared for tough economic times.