IT is essential. Furlough elsewhere

John Leonard
clock • 12 min read

IT is central to continuity and recovery and job cuts should be avoided, but there are plenty of other places savings can be made

It's the conversation that most managers dread. "Look, you're great at what you do and you've been a huge asset to the team, but unfortunately, given the circumstances, we're going to have to let you go."

Many CIOs and CTOs now find themselves having to make some very difficult decisions. Fortunately, the government's furlough scheme allows most to put employees on hold rather than losing them altogether, but who to furlough and for how long is still a fraught decision, with each option presenting its own risks.

We asked some industry insiders for their views.

First the good news

Compared with other departments, IT is in a relatively good place. Years of cost-cutting, outsourcing, unifying, optimising, automating, cloudifying, refactoring and virtualising means that the IT team is one of the leanest, fittest and most adaptable around.

Developers have been working remotely for some time - it's second nature to them - and many operational tasks can now be done at the push of a button too. The widespread move to cloud has seen capital expenditure moved to opex, which is easier to fine-tune when looking to cut costs, and the big, rigid five- or ten-year contracts with external suppliers are thankfully becoming a distant memory.

And there's more good news. Whatever the sector and whatever the size of the business, technology represents the light at the end of the tunnel. Technology enables small firms to swiftly change direction to find new customers, and larger organisations to open up novel digital channels to serve customers, users and employees alike. Technology is key to driving efficiencies through analytics and automation, and it's the wellspring of new products and services too.

Key workers in health, energy, transport and supply chains are currently holding our country together, and IT staff are playing the same role in seeing their organisations through the crisis. They will be crucial helping them thrive on the other side, too.

But there's also bad news

Some jobs are inevitably harder to do remotely than others. The trends of automation and abstraction will be accelerated by this crisis and many of those hands-on jobs in data centres and server rooms who are furloughed won't be coming back.

"Companies with large physical HQs, branch networks and IT teams which look after physical networks, AV, on-premise server rooms - these are strong possibilities for permanent cuts," warned a consulting CTO who recently took on a permanent post and asked not to be named in this article.

Other tasks that are hard to carry out remotely include desk-side support and the mentoring of junior employees, who in normal times would their craft learn alongside more experienced staff.

And sadly, some companies will be so badly hit that they will have no option but to lay off all but a skeleton crew. Those companies will likely not survive.

So what should CIOs do?

The first thing is to make sure the other directors hear your voice, says Chris Weston, CIO advisor at IDC. For a long time, IT was left outside the boardroom because it was seen as peripheral to the main business. While this has changed, there could easily be a temporary but damaging reversion if other directors are not reminded of technology's centrality.

These can be tough times where relationships are tested to their limits and people are understandably fighting their own corners

"Stay as close as you can to your peers on the board," Weston said. "These can be tough times where relationships are tested to their limits and people are understandably fighting their own corners.

"You hold the keys to many of the questions faced by your business and also the best chance of innovative ways to work more efficiently with suppliers and customers. Stay alert to those and there are real rewards in managing your way out of recession."

But what if deep cuts cannot be avoided? Where should they be made?

Support roles may be more easily rotated than others since tasks are shorter in duration, so these may be good candidates for job sharing and on-off furloughing if that's an option. Other roles that are more or less tied to a location such as field technicians may also be hard to carry out at present.

CIOs will also be looking hard at the contractor base, but their third-party status should not make them an automatic target for cuts, said Weston.

"Cutting the number of contractors is always the first move since it doesn't involve any issues around redundancy, consultation, etc. However, it's rarely wise to act indiscriminately and those people working on important cash-generative projects should be retained."

Perhaps it's easier to start with what should not be cut

There are some individuals, perhaps those with a deep knowledge of the business or a valued specialism, who will be indispensable in any recovery and should be kept at all cost.

Good people are the most difficult people to add to a business

"Good people are the most difficult people to add to a business," commented the consultant CTO.

"We must do everything we can to protect our team members and think carefully about what roles are going to be critical for our specific business models as growth returns.

"Perhaps this is the business pivoting to more digital distribution, in which case engineering and architecture roles are key. Perhaps you will have a large and disparate remote workforce, in which case skills that enable secure and productive end-user computing will be key."

For Iain Chidgey, vice president EMEA at analytics vendor Sumo Logic, one area that definitely should not be cut is security. Recent industry data from ISC2 and ISACA shows security teams are chronically understaffed, he pointed out.

Instead of cuts and furloughs, companies should be looking to automate manual tasks and create efficiencies that way, said Chidgey. Also, anything that affects the customer experience should be protected.

"Digital services like website operations and customer service are essential now. They are your route to customers, so pulling investment in those areas would be more harmful compared to any money saved."

Hmm. That doesn't leave much room for manoeuvre…

As we've said, in most organisations tech is a tight ship already. Reducing headcount further could induce dangerous instability - in an efficient IT team every individual counts, according to the consulting CTO who recently advised a client: "Even with minimal take-up of furlough, we will be seeing around 50 per cent productivity compared with a full-strength team."

So rather than job cuts, it makes more sense to take a scalpel to projects that are no longer relevant, rolling contracts mechanically rubber-stamped each year, underused cloud resources (shouldn't that massive archive be moved to cheaper cold storage?) and duplicated effort.

On the software side, non-essential development projects and upgrades - particularly those that might introduce new vulnerabilities - should be mothballed, with attention shifted to reducing risk and shoring up existing services.

"The highest priority should be prioritisation," said the consulting CTO. "Stopping unnecessary work, looking for waste, killing vanity projects that were tolerated for too long; these are the simplest, cheapest way to help us redeploy valuable skills to more important outcomes - and save money."

Software licences are a notorious money pit. Now would be an excellent time to review what you actually need and what alternatives have come to market since you last checked.

"You may be able to cut some overheads here by reducing the volume of licences overall. Alternatively, consider open source where you can. You may be able to replace some existing suppliers and reduce costs that way," said Chidgey.

"It might also be worth talking to your suppliers around how to architect your spending to reduce upfront costs. They may be willing to support your cost reductions if they can get a win out of this as well. They are looking at their own success as companies too."

Should we move to more to the cloud?

Cloud's geographical agnosticism has really come into its own during this crisis in which so many people find themselves physically dislocated from their workplaces. Many organisations have already moved enterprise applications and infrastructure to public cloud providers and managed services and will no doubt be breathing a huge sigh of relief (as well as congratulating themselves on their foresight).

Those that haven't will have their reasons - legacy, regulation, security - and many are doing fine beaming in remotely with VPNs and Citrix, but there may still be some workloads that would be better off in the cloud and now could be the time to migrate - but read the small print, advised Weston, it's not a panacea.

"It would seem at first glance that there are ways to scale back on storage, compute, etc, as activity levels drop. But this is rarely as easy as the sales pitches would have us believe, so it will require smart management of vendors and internal resources to bring under control."

Time to invest?

While it may seem counterintuitive, it could be a good time to invest in technologies that could provide a quick return on investment either now or when the upturn comes, such as those that can help reach new customers, enhance relationships with existing ones (how Primark must be wishing it had a web presence), or drive efficiencies could pay dividends.

For example, marketing automation software can tighten up communications and ease the burden on stretched staff, an upgraded HR suite could improve interaction with staff stuck at home, while the case for collaboration software and cloud productivity suites is self-explanatory.

These technologies can increase employee satisfaction and ease stress, provide psychological support and aid wellbeing. The current disruption could go on for a long time, and when the upturn finally comes, they'll want to make sure their best people are still with them.

Remote working can be a huge advantage to both employees and employers

Crises are great catalysts for change. IT leaders should be making the most of the bizarre circumstances to take time for a little speculative thinking. An obvious starting point would be a re-evaluation of remote working.

"Remote working can be a huge advantage to both employees and employers so creating an operating model which accommodates and embraces this will only benefit in the long run," said Patrick Callaghan, vice president value engineering at data management firm DataStax. And that's not the only one.

"If you look at the companies that are succeeding right now, they are digital-first and make data-driven decisions. We don't know how long the lockdown will go on for or how the economy will respond once things open up again so this is a great time to brainstorm and plan for the future." 

Make better use of data

Data has already changed everything, and it's going to change things a lot more as real-time decision support becomes more prevalent.

Digital transformation was only the first phase and we are now entering the birth of the data-driven or AI-driven operating model

"Digital transformation was only the first phase and we are now entering the birth of the data-driven or AI-driven operating model, where decisions are made in milliseconds by computers rather than days of workflows with humans," Callaghan said.

"The phrase ‘data-driven economy' is one that has been around for a while. I think we are seeing today what it really means - it covers how you serve your customers, how you can deliver what they need to their homes, and how you can then turn those interactions into data that you can use again."

Few organisations are in the position to start applying machine learning to their decision making, perhaps, but all are sitting on mountains of data and putting it to work should be a priority. Certainly, with other activities on pause, now could be a good time to evaluate the possibilities.

"There is more that you can do around your operations and your data, but you have to break out of a siloed mindset in order to achieve this," said Chidgey.

"Ask how you can make your data work harder for you, and where there might be overlaps. For example, does your developer team hold data that your security team could also be using?"

When it's all over

That the crisis will bring far-reaching and fundamental geopolitical and organisational changes is not in doubt. What shape the changes will take is far harder to predict, which means that adaptability and flexibility will be winning attributes.

Just as people can have a good war, a few sectors are having a good coronacrisis. Supermarkets, cloud companies, medical suppliers, online services, gaming and others have seen a huge increase in demand for their services. Within those sectors, the organisations that have fared best will be the ones able to adapt scale, and in this day and age that means, almost without exception, the ones best able to digitise their processes and make use of online channels to serve customers and end-users.

Don't avoid hard decisions now that will position you better to spring back into the recovery

"Those organisations that have invested in digitalisation, collaboration and online business models react the most effectively to the demands of a world coping with a pandemic. It is not too late for others, but time is definitely running out," said Weston.

Currently, most organisations are in survival mode, but once things change, as they will, they will want to be in a position to take full advantage.

"React quickly and decisively," urged the consultant CTO.

"Make the right decisions about prioritisation now to preserve your skilled team members and cash inside the business. React quickly and decisively to growth opportunities - be ready to create your own luck as the recovery approaches by moving fast and early. Don't avoid hard decisions now that will position you better to spring back into the recovery."

More on Strategy

All change? The CIO challenge in the next five years

All change? The CIO challenge in the next five years

The new CIO is one who shapes strategy, rather than having it forced upon them

Ankur Anand
clock 30 April 2024 • 5 min read
How to manage a business during hyper growth

How to manage a business during hyper growth

IT leadership helped double production and sales

Samara Lynn
clock 29 April 2024 • 2 min read
Asian Tech Roundup: Australia's and India's encryption backdoor plans

Asian Tech Roundup: Australia's and India's encryption backdoor plans

Plus, China and Japan in race to put humans on the moon again

clock 19 April 2024 • 4 min read