Economists often state that the recovery is as long as the boom was in years. If that is true, right now we are looking at quite a few more years of austerity.
However, since 2008, business does continue. Innovation does happen. Companies do thrive. They just have to do it better. There is undoubtedly more pressure to cut costs by doing things more efficiently and getting things right at the first time of asking. Get it wrong however and it could be disastrous for the entire business. Just think about Toyota’s recalls.
Cut the Budget and Maintain the Service
Yet with software it is notoriously difficult to deliver what the business wants, with quality, on time and in budget. If the client is internal, then the business is indirectly if not directly sponsoring development and it may be that the business has to cut the I.T. budget yet at the same time expect Service to be maintained.
If the business model is that of a software vendor then existing clients may be applying pressure to lower licence fees and professional service rates or indeed may just cease to exist. This puts direct pressure on revenue and cash flow.
In both scenarios there are two obvious outcomes.
1) Cut Head-Count
With all the consequences associated with it: Low moral in those left; people working longer hours to cover for those that are gone; a definite drop in service quality. Yet once the business outlook starts to improve, your organisation will start recruiting again and because it can take 6-12 months to find people, recruit and get them up-to-speed a year can very easily be lost, during which time competitors, young, eager and lean are filling your target market space that your organisation left behind.
[Incidentally I have personally seen people made redundant and sent home immediately with a six month package, then in the sixth month recruited again].
The next option is to outsource a set of Services or Processes (and even then reduce headcount). Operationally cheaper and potentially better but certainly no guarantee and is full of risk. The setup (due diligence, RFP process, interviews etc) can take a long time as well as the SLA negotiations not to mention the reporting of them so the ROI may take a few years. If your organisation has never done it before, that is yet more risk. Needless to say, if the handover is not good then it will fail. Finally don’t forget that if your organisation’s own Service or Processes are poor then all that is achieved is the outsourcing of exactly that; your poor Services and Processes.
If however, there is a need to shake up the head-count and trim persistent low-performers and there is a need to maintain output and you see the downturn as an opportunity to accelerate beyond the competition, there is a third option.
Generate Value Faster and more Efficient using Agile Techniques
The third option is based on getting things done right the first time and more efficiently so that the Value being generated is realised faster. This is where adopting an Agile methodology can help.
1) Improved Time-to-Market
As Time-to-Market is better, the business will get working functionality quicker allowing them to generate revenue quicker. Not only that but the deliveries to the business will be more regular with the correct level of quality. Unused / unwanted functionality will also be avoided.
2) Greater Cost Control
Agile adoption costs are also easier to predict than the hidden costs associated with outsourcing and the business is in full control of when things get done. There is also no waiting on third parties.
3) Shake up of Resources
There will also be a shake-up of people as some may not be able to work in an Agile team so there will be some cost savings due to the lower head-count yet this is offset by the greater efficiency of the teams and thus output will be maintained or even improved. Actually, a shake up of resources can release a lot of frustration, so introducing Agile can be a way to enforce a shake-up.
4) Change is as Good as a Break
The change itself will raise the energy gauge higher still.
Right so now you go Agile and think, now I can outsource… Wrong! The real benefits of Teamwork are realised with co-located teams so think very carefully about setting up Agile and then outsourcing elements of the team. It will be too early, the teams will not have settled, discipline will not yet be present and the Agile adoption will probably ultimately fail.
If done right, the company will be perceived by the employees, clients and prospects as one that
- is acting to save jobs
- invests in people
- strives to work better
- wants to innovate
- wants to emerge on the otherside of the downturn stronger than ever!
Now, that has to be good for the brand and has to be motivating for employees and management alike.