Tech Planning: What If There’s Another Downturn?
Pick any region. Most respected economists and other experts believe economic growth will be tepid, at best. Despite the hype over a so-called recovering economy, there are continuing concerns about the world’s economy.
It’s important to ask a key question: Are you ready for a possible double-dip recession?
Certainly, many global economic trends are eye-opening. Here in the U.S., job-growth and the consumers’ inability to buy are major concerns.
Moreover, public policy at all levels – federal, state and county, and city government – is hurting the nation.
At the federal level, stimulus spending that totals more than $1 trillion has been inefficient. Relatively few jobs are being created and there are constant calls for more spending. Policies are detrimental. The healthcare reforms are anything but productive. The legislation created 19 new taxes, it lacks cost-controls, and insurance premiums are mounting.
For years, state and local governments have been fiscally dysfunctional, too. They are still increasing taxes and slashing services.
Businesses are disappointed. Many lack an incentive to invest in human resources, marketing and technology.
The aggregate impact: A further deterioration of Americans’ financial and political freedoms.
So, it was not a surprise that technology-research firm Gartner recommends in a study that chief information officers should get ready for another downturn. That requires planning.
Authors of the study, “Plan for a Second Recession, Now,” wrote: “We urge these CIOs to leverage their recent experiences by preparing their enterprises should another economic downturn occur within the next 12 to 18 months.”
Gartner believes it’s important that CIOs communicate closely with senior company executives on priorities. Which IT projects for the next 18 months could be postponed or even disregarded?
My sense is that very function or project should be comprehensively studied and any spending should be approved. The budget needs to be detailed and every item needs to be justified. That’s called zero-based budgeting.
Just to cover all the bases, your department’s finances need to be constantly reviewed.
If your company is in dire financial straits and is attempting a financial turnaround, it’s also important to understand the perspectives of both the senior executive and the chief financial officer. There must be a daily review in the form of a flash report. A flash report can be designed to monitor indicators on a daily basis and to evaluate your actual performance against the turnaround plan. For more reading, see Step-by-Step Solutions for a Company Turnaround.
If a poor relationships exist between IT and the finance department, which is often the case, it’s important to understand the CFO mindset. You might want to read: Tech Trends: CFO’s the Boss, IT Departments Are Disappearing.
Good luck. Start planning and strap in the proverbial seatbelt if the roller-coaster ride proves to be harrowing.
From the Coach’s Corner, if you’re thinking about getting into business for yourself, I’d recommend reading: Eight Strategies to Consider Before Starting A Tech Business.
“Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.”
-Steve Jobs
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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
More Voters Say Washington State is Headed the Wrong Way
May 24, 2010
Washington state is headed south when it needs to go north. That’s what a larger percentage of voters is saying.
Disapproval ratings have significantly increased over the last six months, according to a new University of Washington poll. In fact, it’s a 16 percent increase in voter disapproval ratings – 44 percent of respondents believe Washington is “seriously on the wrong track.”
The double-digit increase in disapproval ratings – up from 38 percent in Oct. 2009 – was reflected in the nonpartisan academic poll, The Washington Poll. Forty-one percent say Washington is “going in the right direction.” Fifteen percent answered “don’t know.”
Voter opinions appear to coincide with the state’s economy. Sixty-two percent say “jobs/economy” will be the most important issue in the Nov. 2010 elections.
Twenty-seven percent cite healthcare reform as the No. 1 election issue.
Regarding the performance of Gov. Chris Gregoire, 17 percent “strongly approve” and 27 percent “somewhat approve.” But her disapproval ratings as a Democratic governor are higher than her approval ratings. Seventeen percent “strongly disapprove” and 30 percent “somewhat disapprove” of her performance.
Sen. Patty Murray, a Democrat, is favored by 42 percent while 39 percent indicate they’ll vote Republican.
When pitted against potential Republican candidate Dino Rossi, she holds a narrow 44 to 40 percentage lead with a margin error of 3.9 percent. The margin of error in the other contests is only 2.8 percent.
Thirty-five percent favor the income tax initiative on well-to-do state residents. But another 17 percent who lean yes also say they could change their minds, and another 10 percent are undecided. Meantime, 23 percent oppose it. Another 5 percent who lean no, say they might switch. Two percent who are undecided lean no.
Overall, the Legislature received an approval rating of 36 percent but netted a 43 percent disapproval rating.
Conducted in early May, 1,252 registered voters were surveyed in the poll sponsored by the Washington Institute for the Study of Ethnicity, Race & Sexuality at the University of Washington School of Social Sciences.
To view the polling data: statewide, and the party and region.
Certainly, these results are not a surprise. The economy has been worsened by bad public policy. Again in the 2010 session, the Washington State Legislature violated standards of transparency, hiked taxes by $800 million, and failed to take prudent steps to head off another multi-billion dollar deficit in the near future.
What’s needed is reform for good government.
From the Coach’s Corner, to stay current on how state politics affects business, and for a wealth of data and information, visit these sites: www.awb.org, www.businessinstitutewa.org and www.enterprisewashington.org.
Analysis: Steps for Economic Success in Washington State
July 29,2009
In assessing economic-development strategies, it’s shortsighted to merely look at the headlines. But you can tell a lot about the economy by taking a cursory look at the unemployment rate. Unfortunately, Washington ranks No. 34 in the nation – tied with Missouri at 9.3 percent.
How can government brighten the unemployment picture? The effectiveness of economic policies depends on government and whether it has economic wisdom. That means allowing for economic and political liberties.
Economic liberty is the freedom to make decisions in a free-enterprise system. Political liberty is possible when government stops its unproductive practices so entrepreneurs can have the necessary tools to create jobs and take full responsibility for their successes or failures.
Here are economic strategies for government to consider:
Discernment of Main Street’s issues. Listen to business. This column warned about economic conditions long before the recession was recognized. My confidential discussions with businesses revealed an undercurrent of pending economic chaos long before the recession was publicly acknowledged.
Encourage consensus building among stakeholders, including business and unions. Adversarial relationships and chest-beating fail to create and maintain jobs. Better communication among stakeholders is paramount. Management must listen to workers, and develop quality plans and implement them. Unions need to understand how business works. In other words, choose to disagree but focus on principles, not personalities.
Prioritize government services. You might recall the inspiring headlines when Gov. Gary Locke implemented Priorities of Government budgeting. The goals were fiscal responsibility while providing quality services. But when was the last time we enjoyed such headlines? To most businesspeople, government is not concerned with performance, but is seen as focused on imposing financial barriers and justifying costs.
Develop budgets that enable us to live within our means. Admirably, Gov. Chris Gregoire publicly denounced tax increases when the economy soured. It was heartening news.
But public servants have a history of failure to treat budgets as they would their own pocketbooks. You might recall when state spending skyrocketed by an average of more than 17 percent per biennium – so voters passed Initiative 601. They obviously wanted spending limits, but the Legislature amended I-601 seemingly countless times. To make matters worse, a lawsuit was filed when government played what was described as a shell game to artificially manipulate spending limits.
Another challenge: Underfunding of government pensions. In addition, except for many big-business CEOs, public-sector pensions are too laissez-faire compared to the private sector – a time bomb set to go off.
Quality government behavior. Many government workers try to do a good job. But some employees overseeing business, e.g. Department of Revenue employees, do not understand their own regulations.
In a panic to increase revenue, they’ve forced businesses to waste time and resources to justify tax filings because the agency employees were unfamiliar with their own guidelines.
Agency employees could learn another lesson from the private sector. Companies succeed when they correct their mistakes and apologize to customers.
Create a healthy tax system. Start by listening to small business owners – review and correct the state’s business and occupation tax. Washington’s B&O tax is unfair. The tax is based on a business’ gross receipts instead of net profits. It’s a major reason why new companies fail to sustain their workforces and close down.
And why should companies carry the burden for more than 50 percent of state and local taxes? Washington is the second-highest in the nation for unemployment insurance taxes and the third-highest for workers’ compensation benefits.
Government must review its policies, procedures, taxes, fees and charges. At every juncture, governments should ask the question: “Is this productive for economic development?”
Outlaw predatory financial practices. Thousands of state residents have been victimized in financial services – from credit card companies to post-transaction marketing. Work with representatives in Congress to outlaw predatory behavior by credit card companies and debt collectors.
To his credit in 2009, Attorney General Rob McKenna requested lawmakers to pass a law that would stop the deceptive Internet marketing behavior of a Bellevue company, Intellius. But lawmakers failed to act.
Instill greater public confidence. Today’s public officials can learn lessons from President Franklin D. Roosevelt and his fireside chats on radio to reassure Americans. Businesses will start making investments in their businesses and hiring workers, if they have reasons to be confident.
After developing strategic plans, government leaders at all levels – the state, counties and cities – can be a positive influence. Like any good marketing campaign, they should tell the public what they’re going to do to improve the economic climate. Remind citizens as they enact new policies and procedures. Then, tell businesses about their economic accomplishments.
If governments get this done, Washington will become the leader.
From the Coach’s Corner, it’s helpful to be mindful of I call “The 20 Characteristics of a Healthy Economy.”
Here are my 20 healthy-economy characteristics:
- A big-picture consensus and strategic plan for economic development
- Action plan resulting in increased entrepreneurship – local businesses that hire more local workers
- Diverse industry base of employers
- Success at encouraging families and businesses to invest and locate in the community
- Family wage jobs
- Decreased need for social services
- Balance between responsible development and redevelopment without driving out residents or businesses
- Infrastructure and solutions, including diversity of land uses that are self-sufficient without relying on outside sources for repeat, large funding
- Growth that doesn’t damage the environment or use excessive space
- Accessibility and equity for residents in education, employment, housing and transportation
- Happy and healthy residents who have a strong pride in the community
- Festivals and celebrations
- Positive public image
- Enhanced shopping opportunities
- Anchor projects that encourage commercial, retail and related mixed uses
- Optimal tax revenue
- Continuous efforts for beautification, for improvement in quality roads and transportation
- Widespread charitable contributions for robust nonprofit organizations – vibrant civic and service clubs, churches and their respective organizations, and other groups.
- Open and creative community leadership that encourages and nurtures emerging leaders
- Ongoing review and fine-tuning of the strategic plan for economic development and creation of jobs
