A CEO’s guide to the Austerity Years (Can #salesforce deliver IT savings?)


How SaaS can deliver IT cost savings

IT Savings? We can do it!

IT Savings? We can do it!

The world is shaking, again. The chilling shadow cast by 2008 is growing not shrinking . . . ‘Default’ has become almost as common a search phrase as ‘mp3’ and ‘porn’. We all know that we are no longer in a safe place. Yes, you hear this on the news, read it on the Internet, and see the angry crowds protesting on TV. Okay, you say, nothing new, nothing that I can do about it . . .

But what about your company, are you ensuring that it is prepared for a world of long-lasting austerity? (In ‘This Time Is Different: Eight Centuries of Financial Folly’, by Reinhart and Rogoff (2009), the authors state that the aftermath of financial crises is “deep and prolonged”, with “profound declines in output and employment”. On average, they warn, a modern financial crisis has caused the unemployment rate to rise for more than four years and by 7 percentage points. (We’re now at almost four years and 5 percentage points, in the U.S.A.) The recovery, they state, “takes many years more”.)

Too many companies still behave, (apologies to my French readers), like French governments before WWII. Spending a lot of money building a massive IT fortress may look impressive but, in a real war, the result is that the defender is less mobile then their more flexible opponent. That there is a similarity between the leaders of pre-war France and those of current large companies may sound strange but, read on, it is well-worth your consideration.

Just like those French leaders who, in 1939, believed that their country was safe behind the strong walls of the Maginot Line, so today’s senior executives of large companies all too often believe that, if they have invested, (as they have been told to by their CIO), in the all-embracing defensive shelter of SAP, Oracle, Microsoft or Siebel servers, they are safe, forever, from the hostile world outside. In both cases, however, nothing could be further from the truth . . .

In the case of France’s seemingly formidable Maginot Line, the highly mobile German panzer troops, (with their coordinated air and artillery support), simply bypassed the impotent immobile steel and concrete fortifications and triumphantly entered Paris within a few days. In the 1930s, investing in building strong fortresses probably seemed an excellent idea to French generals remembering the bloody static war of attrition of WWI – when winning a battle simply meant holding your positions and letting your enemy run out of ammunition and manpower by constantly shelling their trenches. Yes, this would have been a winning strategy . . . IF the next war would, again, have been the same: a static one; such strong walls would have protected those inside and the vital routes into their country. But, as we know, it played out very differently . . .

Too many of today’s company C-level executives, just like their French pre-war high command predecessors, are making the same dangerous mistake. They wait patiently behind massive fortress walls of heavy IT investments and expect they will be safe from whatever will come. (Just like those short-sighted Frenchmen in the interwar era.) Indeed, whilst their investment into servers and data centers may look impressive and formidable they share the same weakness as the French Maginot Line – they have been built for a type of war that is past . . .

In Britain, however, Sir Winston Churchill recognized the crucial role that aircraft would play in the coming war. Instead of building extensive fixed fortifications around the UK’s coast, his government invested in the production and development of a new weapon . . . modern fighter aircraft. And, as we all know, he was proved right. Spitfires and Hurricanes were, in the country’s coming battle for survival, a far better asset than fixed lines of concrete and steel.

The same thinking can (and should) be applied to IT investment for enterprises. Such investments are both offensive and defensive. Like military investments, making the right decision plays a vital role in a company’s ability to survive or make the right offensive tactical moves. And of course, in times of austerity (remember, recovery “takes many years”), if you need to divest some parts, or all, of a company, having no expensive assets with long years of depreciation to come makes a considerable difference.

Is there a better way?

Yes. Instead of investing in an expensive fixed fortification of servers with vested CAPEX and OPEX for months and years to come, you can invest in a highly flexible, cost-effective strategic force.

Salesforce.com investments, (like Britain’s investment in Hurricanes and Spitfires in WW2), are the way for businesses to win their wars today and tomorrow. Such enterprise investments are agile, mobile, and social.

Agile – meaning, no vested investments into technologies and their maintenance, you pay-as-you go and, when your needs change, you change or terminate the contract(s).

Mobile – your crew, empowered with force.com, moves faster, delivering results on the business “battlefield”, quicker and more cost-effectively than your business’s “enemies”, who are still planning for yesteryear’s conflicts.

Social – modern companies are no longer lonely fortified strongholds with high walls, safe when they are isolated from the outside world.

That’s why today’s wise leaders are investing into Force.com just like they would be building Hurricanes and Spitfires, not Maginot Lines, before WWII.

About the Author: 

Jiri Kram, is a consultant with Tquila, he specialises in Salesforce solutions and social media.

Follow Jiri on Twitter @tquila_jiri

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