The Credit Crunch – should we all be panicking?

With sections of the media full of doom and gloom, how should businesses view the prospects for the general economy and their own specific marketplace... and how should IT departments respond?                         

Reports of bank failures, part-nationalisations, inter-bank lending difficulties and the threat of a recession have left readers in little doubt that there are some serious issues affecting the global economy.  But, is there a danger that sensationalist reporting practices – where snappy headlines are more valued than balanced arguments – could be painting a picture that’s far blacker than reality?  The entire economy is influenced by ordinary people and the level of confidence they have to keep on purchasing goods and services.  So, if economic problems are being over-exaggerated, are markets talking themselves into greater difficulties?

When people panic about the stability of financial institutions and queue outside banks in order to withdraw their life savings… word gets around, more people join the queues and the health of, previously trusted, banks can suffer irreparable damage.  It’s a classic case of a self-fulfilling, negative prophesy.  Naturally, our survival instincts make us wary of risk – and that’s a good thing, provided the response is proportionate to the risk.  However, we each need to make sure that we don’t fall prey to blind panic and lose the ability to evaluate which purchases and investments are still worthwhile.  This also holds true for business investments – including IT strategy decisions that could help to reduce running costs or establish new revenue streams for a business. 

Efficient IT… reducing costs and improving value to the business

What can IT departments and their suppliers do to help businesses through difficult times?  Well, it’s a matter of making sure that IT teams continue to do what they’re best at – running efficient IT services that benefit the business, while also reducing IT running costs.  Surely after years of being tasked with ‘doing more – for less’, IT departments are well practised in improving business value.  Furthermore, IT suppliers and vendors have devoted vast sums to developing technologies that improve efficiency and reduce costs.

IT consolidation and virtualisation projects can still be justified on the basis of a thorough cost-benefit analysis.  In addition, with today’s high energy prices, technology refresh projects – that previously may have been approved as a means of improving performance – are now more likely to be justified on the basis of upgrading to technologies that reduce energy, cooling and space requirements… while also delivering improved performance.  Additional benefits come from the fact that reducing energy consumption also helps to boost a business’s Corporate Social Responsibility profile.  At Bell Microsystems, we’ve seen significant growth in these areas – with businesses increasingly focussing on eco-efficient IT solutions.

When does a problem become a crisis?

With every penny of IT spend under scrutiny, it’s important to work with suppliers that can help you to get more value out of your current infrastructure.  This could be from helping you to maximise trade-in values against new equipment or by extending the working life of existing systems and storage – perhaps by redeploying old equipment for other uses within your business.  A good IT supplier will sometimes also challenge perceptions about the need for new systems.  I have seen several cases where customers were about to buy additional storage devices, yet analysis of their data storage policies revealed unnecessary duplication of stored data… and the potential to free up existing storage capacity.  

It’s worth remembering that throughout history there are many cases where a crisis only became a crisis because people called it a crisis.  There’s no denying that there are some fundamental issues within the global banking community and these have given rise to some real difficulties.  But, have some journalists and analysts made the situation far worse by manipulating public opinion and creating a breeding ground for panic?  The good news is – if mass opinion can be influenced in a way that undermines confidence and markets, surely mass opinion can also be steered towards a more balanced view, which focuses on getting on with running businesses… and IT departments.

What are your views… and what tips do you have to help other IT teams rise to today’s challenges?