Surviving the downturn lesson #73431

Image by kris247 via Flickr While there have been hundreds of posts recently about how to stay positive and how to survive a down turning economy in the tech sector, I thought I would also add my own perspective as…

Image by kris247 via Flickr

While there have been hundreds of posts recently about how to stay positive and how to survive a down turning economy in the tech sector, I thought I would also add my own perspective as someone involved in the technology innovation for the past 15 years.

So a significant crisis in the global economy is going to affect the dynamics of almost all industries. You all know change is a constant force in business and in the tech sector change is also a constant reoccurrence over much shorter cycles than a lot of other industries. But in a significant economic event such as we are seeing now the change is even more rapid and unexpected than usual and those who are too big to meet the change quickly, fail to adapt or can’t adapt for other reasons are going hurt significantly if not fail completely.

Too many businesses try and ignore change. I have countless organisations that were previously successful fail when change occurred, by attempting to ignore the change or ride it out. Their approach was to keep trying to do what they had done before. And when that didn’t work they continued trying to do what they were doing before but cut more and more staff, slash marketing and new initiatives until eventually this approach killed their ability to produce, innovate and generate sales and they went out of business. On the flip side radicalism is risky also, I once observed a large timber company try and become a web site company when the bottom fell out of the lumber business with dire consequences. Recognizing change, having the guts to acknowledge change and making changes in strategy to adapt to change is a difficult but an important process that is required to survive long term. Of course slash the fat and cull unnecessary expenditure, this is also what your customers are wanting to be and will be looking for providers who can help them achieve this.

Creating technology that significantly helps organisations do more with less should do well right now. As an example, since the start of the current downturn we have seen interest in our RockSolid product steadily increase. Our customers are trying to do what everyone is trying to do, improve efficiency through cost reductions and increasing value from existing assets. For our customers DBA staff are significant costs and reducing/re-deploying or gaining additional value from them is a primary issue. Our product helps remove the high staff cost component from the operational roles (low value producing roles) allowing the staff to be used in a higher value generating capacity. The managers in the field themselves are driving this initiative as they know if they don’t they will likely just receive a blanket order to cut staff by n% which will result in reduced costs but also a reduced ability to deliver the current level of service.

Doesn’t all technology look to reduce costs or increase value in some way? Sure in theory, but the characteristics of what will do well right now is more specific. The current climate has come on quickly and a lot of businesses weren’t expecting it and weren’t prepared. Therefore people are looking at improving efficiency (without destroying value) using solutions that have an immediate or short term path to ROI. It is too late to put in a new system that will improve efficiency in 2 years if you have significant cost pressure now. The ROI that you are offering to your customers has to be proven, significant and measurable. By nature SaaS offerings are well positioned to gain ground. Most SaaS offerings have a low capital outlay (a monthly fee usually) and a quick path to producing a positive ROI so are by nature much lower risk than a full perpetual purchase of a product that may take 2-3 years to see that realized.

So my advice at this point is simple. Improve your own efficiency but don’t lose your ability to produce/compete. Put a focus on your existing technologies that provide significant short term returns. If those returns are not clear then invest in making them clear through customer case studies, market analysis etc. If your current technologies have a high initial investment cost (infrastructure etc) look at ways you can help mitigate that by, for example, providing your customers a SaaS alternative. Also if you have “mammoth” products that have a long implementation timeframe, look at ways you can componentize these and provide your customers small, quick and practical measures to help them achieve their own efficiency goals quickly but can be built upon longer term.