Managing IT in a downturn: Beyond cost cutting

According to the McKinsey report "Managing IT in a downturn: Beyond cost cutting", there are opportunities to drive business benefits even in a slow or bad economy. The authors state that economies around the world are slowing down, and companies are looking for ways to trim spending and improve the bottom line. Although information technology often represents a small fraction of the corporate cost base, senior executives inevitably turn their attention to IT budgets for substantial contributions.

Yet in some instances, IT investments deliver more value to a company’s top and bottom lines—by creating new efficiencies and increasing revenues—than any savings gained from traditional IT cost cutting.

The "sweet spots" for IT improvements during slowdowns include:

• Manage sales and pricing. Develop insights into customer segments and improve pricing discipline to increase revenues without increasing prices.


• Optimize sourcing and production. Rethink supply chains and logistics to improve the scheduling of deliveries and inventory management.


• Enhance support processes. Improve the management and use of field forces (such as installers and field technicians) and of customer support centers.


• Optimize overhead and performance management. Sharpen awareness of risk exposure and improve decision-making and performance-management processes.