During Economic Downturns IT Can Impact a Company’s Top and Bottom Line Results

As economies worldwide slow down, companies are increasingly turning to their CIOs to help them do more with less.  A recent article in The McKinsey Quarterly suggests that smart IT investments during this time can deliver substantial benefits to both a company’s top and bottom lines by creating efficiencies and opportunities for increased revenues.  

IT has undergone huge transformations over the past 10-15 years and following the dot com bubble, CIOs began working more closely with business unit leaders to improve the performance of their departments.  The result is that technology now meshes more tightly with operations than it ever has, adding efficiencies and even new revenue channels upon which companies have become reliant.

Now, during times of economic stress, the McKinsey report cautions businesses about drastically cutting IT investments.  When business and IT executives jointly take an end-to-end look at business processes, the resulting investments can have up to ten times the impact of traditional IT cost reduction efforts.  

Although, CIOs are encouraged to seek opportunities to trim unnecessary expenditures, the McKinsey report says the trick is to scan for opportunities to improve the top line – opportunities such as improving the customer experience, reducing revenue leaks and improving operations.  Such efforts begin with studying which operational areas are most likely to produce near-term revenue and efficiency gains such as:

• Using technology to gain customer insights that can improve pricing strategies.
• Optimizing production by improving supply chains and logistics to impact inventory management.
• Enhancing customer support processes such as field team management and support centers.

The report concludes that downturns may give companies an opportunity to review all operations and look towards adding efficiencies and revenue growth through IT-enabled strategies.

Read the full report

For insights into how local companies are managing IT during the economic downturn, see the story in Business First