Soft times, hard bargains
Admittedly, it's sometimes hard to recognize that the glass is half full rather than half empty as your colleagues, peers, and competitors start to disappear and the active entries in your Outlook address book dwindle. But someone else's misfortune, as heartless as it may seem, can be an opportunity for you to think outside the box to benefit your company.
If you're a resourceful IT manager, you can find some benefits and good deals these days. The following IT managers' action items may help you feel like you've snagged a valuable item at an otherwise bad garage sale.
Howard Millman operates Data System Services, an independent system engineering consultancy.Downsizing in the technology sector is expanding the pool of qualified candidates available for IT jobs, while eliminating hefty signing bonuses and perks. This helps steady-at-the-helm companies hire the talent they need but couldn't previously afford.
"In one way, I was happy to see this slowdown happen," says Ginger Atwater, Burlington Coat Factory's director of e-business. "It shows job applicants that what Burlington offered them all along in terms of salary, benefits, and opportunity was fair."
Unlike the awkward position some companies found themselves in, Burlington didn't have to sharply reduce salaries or cut positions because it hadn't participated in the wild run-up of salaries over the past two years. Although that policy made it harder to attract quality people, the economic slowdown now validates Burlington's position of paying a fair but not exorbitant salary. Atwater relates how she recently hired a talented and experienced Web designer at a reasonable salary and benefits package. One reason the applicant signed with Burlington was the promise of job stability; the applicant's prior, high-paying job turned out to be short lived. "She got what she wanted, and I got someone I didn't have to train."
James P. Kelly, chairman and CEO of United Parcel Service says that "most jobs cut during downsizing periods should have never been created in the first place. Downsizing provides an opportunity...to clean house." While some companies relish the chance to transform dark clouds into a silver-lined opportunity by eliminating underachieving staff, other companies reacted and are still reacting with greater sensitivity to the forced layoffs, although few will admit it publicly. Either way, the result is the same. Companies use layoffs to remain profitable or to prove to Wall Street that they can get out of the red in the future.
Especially hard hit were companies that serve the technology sector, such as application infrastructure firm Xand Corporation, in Hawthorne, New York. According to Joseph Fuccillo, senior vice president, Xand "cut expenses 10 to 15 percent, companywide. That gap did not result from overspending in the past or bad planning but was caused by the disappearance of some of the markets we were in."
In some areas of the country, of course, recruitment is still a challenge, but IT employers are enjoying other benefits. For example, Swanson Health Products, located in Fargo, North Dakota, has a stable work environment. "Fargo has less than 2 percent unemployment," says COO Glen Pirie. "While we don't see many candidates, we do see a change in employees' attitudes. People aren't leaving for a new job just because they can get 25 cents more per week somewhere else."The slowdown and lower prices may also benefit overloaded and time-pressured network managers. According to Bob Miller, vice president of information technologies at the Nashville, Tennessee-based Shop At Home television program, one time-saver he especially appreciates is the reduction in the number of vendors competing for his attention. "I don't think the shakeout is all bad," he says with a hint of humor. "At least I no longer have to listen to so many vendors claiming to have some new product that's guaranteed to make my life easier."
Because vendors also have to reduce prices to sell excess inventory in a tight market and sometimes compete against their own barely used products, they scale back new product introductions. With fewer new products to keep track of, some IT managers can finally find time to focus on long-term goals. Chandran Sankaran, CEO of Closedloop Solutions in Redwood City, California, warns against adopting the same mindset that led some vendors into trouble in the first place. "There are many bargains to be had from vendors when the economy is weak, but it's dangerous to focus strictly on incentives. Vendors may disappear, so it's more important to focus on things that will create a long-term value in the business."Xand capitalizes on the excesses of the firms that went on buying binges over the past couple of years. "There's an incredible amount of high-quality, used equipment available," says Fucillo. "We always peruse the ads before we buy anything." He gives one example of a recent purchase: a high-end Cisco gigaswitch router that lists for nearly $50,000. He recently bought the product for only $8,900, still in its original packaging.
Nationwide, IT managers have similar bargain-shopping tales to tell. Shop At Home's Miller admits that he's willing to take advantage of the greater availability of first-rate hardware and personnel in this buyer's market. "I just ordered new Sun servers and paid an equipment broker one-half what I paid for the same equipment a year ago. What's more, I just hired two experienced Oracle developers without the same offer-counteroffer problems I had last year. Back then, a recruiter would contact me to suggest a candidate. At the same time, that candidate was also talking to five other employers, letting everyone bid up his salary."
And vendors are definitely beginning to offer better service packages, too, especially smaller companies trying to maintain a toehold while their competitors sink. Swanson's Pirie is seeing more agreeable terms as incentives, including lower prices, better repayment terms, and faster delivery from small to large vendors anxious to generate new orders.
Database giant Oracle recently launched an incentive program in which the company will install and configure its customer service and procurement applications in less than 90 days, or Oracle will pay for it. Previously, the process required six months or more.
And if IT managers appreciate better services at lower prices, they love them when they're free--as in donated. Stephen Breman, a director with the nonprofit American Red Cross, in White Plains, New York, says that when local companies go out of business or close an office, they sometimes contact him. "When a big food company closed, they called us to pick through their office equipment. We left with a van full of computers, furniture, even laptops." In return, these companies get a good feeling and a write-off.Just as sound economic theories hold true in any age, so does Darwin's theory describing the survival of the fittest. In today's climate, the players left standing at the end of the game are not always those with the best combination of products, ideas, or services, but the ones with the best business plans. And a solid plan suggests taking advantage of short-term benefits that result from a slowdown. However, don't become lulled by the ease of recruitment and lower hardware prices. What the market gives today, it can take back tomorrow. "I tell my colleagues not to assume that their employees will stay put because of the tighter market," cautions Miller. "Continue to pay special attention to retaining them even in the slowdown; qualified people will still get offers, although maybe not as many."
On the other hand, don't overreact. Recognize that slowdowns are an inevitable part of doing business, and though they require some belt-tightening, they need not elicit anguish. So take advantage of these downturn benefits while they last and wait for the economy to come full circle. It always does.