How IT Can Help Businesses Roar Out of a Recession

eWEEK DATA POINTS: With the recent pandemic, economic projections by McKinsey and others for the coming months paint a difficult picture. Yet, history suggests that solutions to our current challenges do exist, and the operating system can play a major role here.

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IT has become pivotal for any company looking to thrive in this era of social distancing. Reducing cloud costs quickly could be the solution to not only surviving, but possibly thriving. organizations might find the best opportunity for that in the most unlikely of places - the operating system.

IT finds itself in the driver’s seat for guiding businesses through these uncertain times. With the increased urgency to cut costs while remaining competitive, infrastructure optimization plays a central role in the path forward.

With the recent pandemic, economic projections by McKinsey for the coming months paint a difficult picture. Yet, history suggests that solutions to our current challenges do exist. By looking at the organizations that came out stronger after previous downturns, we in IT can find basic and proven strategies to not only survive but possibly thrive. Thankfully, Harvard Business Review did that heavy lifting already in an article it published in 2010, entitled "Roaring Out of Recession."

This suggests that by cutting costs in the right areas and investing for innovation in others, organizations increase their odds of surviving during, and thriving after, a downturn. HBR discusses those details in greater detail as well as outlining a possible way for IT to implement these lessons learned by focusing on optimizing core IT components, such as the operating system. Information for this eWEEK Data Points article was compiled by Udi Tizan of Granulate, a Tel-Aviv-based AI-powered optimization software provider.

Data Point No. 1: Using History as Our Guide

Harvard’s study covered three recessions: 1980, 1990, and 2000. It looked at a reasonable sample size of 4700 public companies, covering the three years leading up to a recession and the three after it.

First, the bad news. Only a small number of companies (9% of their sample size), did better after the recession than when they entered into it. The 9% statistic suggests two things:

  • Thriving in a recession is challenging.
  • Most companies did not have a proven blueprint entering into the recession.

Organizations cannot do anything about the first, but the second point can be addressed and should be a top priority given our current economic situation.

Data Point No. 2: A Blueprint

After looking at the behaviors of their sample, HBR bucketed each member of the group into one of four cohorts: prevention-focused, promotion-focused, pragmatic and progressive. If you are interested in reading more about the categories you can read the article here. However, in the interest of time, this article will focus on the clear winner: the pragmatic companies. It will then cover IT’s central role in winning during this period.

It isn’t about just cutting costs (see the article to view statistics on organizations solely focused on cost cutting) nor is it just about spending to capture more marketshare. Frankly, it isn’t even just a combination of the two; it is the surgical application of cost cutting and spending that yield the most impressive results. Those organizations that were able to thread the needle between the two saw a 37% chance of exiting stronger than entering. As the article states: “These companies reduce costs selectively by focusing more on operational efficiency than their rivals do, even as they invest relatively comprehensively in the future by spending on marketing, R&D, and new assets.”

It’s important to note that operational efficiency isn’t about trimming staff; in fact the majority of organizations that were the most successful did not cut staff. Operational efficiency, in this context, is about employing the right resources in the right way.

Data Point No. 3: IT’s Central Role in the Path to Survival and Perhaps Prosperity

Operational efficiency can be segmented several ways, but this article breaks it down into the classic three familiar to most in IT: people, process and technology. The overly simplistic approach to cutting costs by slashing staff does not lead to the best outcomes. Rather, the secret is in the correct application across all three of these areas. While it’s obvious IT has a play in the technology area, it is also central to the two other segments: people and process. The systems that help to design and deliver efficiency across processes are software solutions; those that help to manage human resources are, of course, software solutions.

Because of the recent shift to virtual work, IT’s role in day-to-day activities is now more central to survival than ever before. IT is the organization responsible for the implementation and ongoing operation of the tools supporting virtual work. Without these tools, any hoped for progress comes to a halt.

Data Point No. 4: The Start of a Specific Blueprint: The Short- and Long-term Approach

So what can IT organizations do in their current environments that both cut costs and improve the performance of the digital services they are delivering? In short, optimize existing fundamental aspects of the IT infrastructure. The operating system is one area of the infrastructure ripe for optimization in the sections that follow.

Other tools that might help in cutting costs or improving performance such as those for general infrastructure, application and cloud management are already in use by most organizations. For example, most IT departments (and certainly those within digitally native companies) have already deployed cloud management and APM solutions. So, any optimization gains they might get from those solutions have already been realized. Those that haven’t deployed those types of tools can expect their implementation to be months. This is typical  in a time when we need to cut costs and improve performance as quickly as possible.

Cloud-cost management tools are also important, and certainly they can help in finding much-needed budgetary room, but again they take time to implement and won’t necessarily improve the digital experience for your customers. Check out this cloud-cost-reduction guide (registration required).

If you look at it from an application-delivery perspective, refactoring code to function better in today’s environment takes time and ‘costs’ an organization expensive development talent. Talent that should be focused, now more than ever, on innovation and bringing value to the user.

Data Point No. 5: Operating Systems and the New Frontier of Opportunity

A new approach for optimizing the use of compute resources has recently emerged that might be the perfect fit for the critical operational efficiency challenges that organizations are facing.

Operating systems, one of the main building blocks of any infrastructure, were designed to be generic general-purpose systems supporting acceptable performance for different applications and use cases. In their core, operating systems are trying to achieve interactivity and fairness in resource management, therefore resulting in suboptimal performance of all tasks for overall general performance. 

However, applications and workloads running in production are mainly designed for performing specific, repetitive tasks at high performance and scale. In these environments optimizing decision making for an application specific goal such as response time or throughput, rather than interactivity or fairness, leads to significant performance improvement.

This new frontier of real-time continuous optimization enables organizations to use AI-driven infrastructure optimizations that are suited specifically to the running workload. By learning the application’s specific resource usage patterns and data flow and analyzing CPU scheduling order, oversubscribed locks, memory, network and disk access patterns it is possible to identify contended resources, bottlenecks and prioritization opportunities and solve them using scheduling and prioritization algorithms.

This approach ensures the most efficient use of compute resources, resulting in the need for fewer VMs, fewer compute resources--reducing costs significantly while delivering better performance. You can find case studies outlining sample results on this website. Easy to implement and resulting in quick ROI, this technique and similar ones will help us accelerate innovation while cutting costs.

So there is a proven path forward in these difficult times, and the technology to help organizations move along that path is available. Now more than ever, IT has the chance to lead the rest of the enterprise to a better future.  

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Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 15 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...