Wednesday, 8 October 2008

Thought for the day

(By Anthony Miller). We receive many emails from top executives commenting on the industry (and indeed on our own comments), most of which we cannot reproduce, let alone attribute. We received this thoughtful piece on the IT services sector from one such executive (no names, no pack drill) we think worthy to bring to readers’ attention (and have added some of our thoughts too).

“Having lived through the last two IT downturns, in early 90’s and ‘01/02 I think for the Services companies there are three very simple lessons on how to operate in that environment:

1. Keep your organisation simple: simple to understand and manage; simple for clients to buy from you; simple for your own people to understand, and feel part of; simple to move people and assets to deliver to clients, or out of the business to save money. Complicated structures, designed by management theorists rather than practitioners, get in the way of fast action and the entrepreneurial spirit needed in a recession.

2. Experienced line management is critical; this is not a time for many people to “learn on the job”, especially at a senior level. They are less likely to have the right instinct and be prepared to act on it; safe is better than sorry. The time for the radical new people is when the market is part way through the up-turn: then it is easier to learn, and you can absorb some mistakes. Now you can’t!
(Ed. The “no time for novices” point is particularly pertinent, though I see elements of Cameron’s riposte applying to our sector, i.e. it was some of the ‘old hands’ that got companies into this mess in the first place!)

3. IT Services is a people business, not a manufacturing industry. Whilst offshore delivery is an essential part of the mix to get the cost (and quality) right, proximity and strength to customers is critical. A belief that a low cost base is the only requirement is an obsession for some, and misguided. You need both, in depth. Clients still buy services for emotional reasons as well as cost. (Ed. I do hope our rantings on offshoring are not taken to mean that offshore is the only answer. It clearly isn’t. You certainly need depth in both onshore and offshore, but we fear some of the players who should know better are still missing the point – or have got it too late.)

This doesn’t mean that you can avoid the downturn; see weakening performance etc. It does mean the probability of resisting is higher, and the risk of going under is lower. There are enough risks out there now without companies to add to them!!”

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