The purse strings may be a little looser than 12 months ago but the economic downturn mindset will continue to inform a lot of sales strategies. TREVOR CLARKE reports.
“Batten down the hatches, put the kids and pets out of harm’s way, cork the wine and make sure you’ve got the resources to get through the bitter economic winter about to freeze the life out of businesses across the country. Actually, you might need that wine…”
Twelve months ago, that kind of sentiment was not uncommon. We didn’t have a recession technically, but we sure as hell had a downturn. The first quarter of the 2009 calendar year in particular, took a hefty bite out of many a budget and revenue stream.
In short, the devastating financial mess that poisoned much of the developed world finally slipped into Australia’s economic blood stream.
“First was the availability of funding – a lot of businesses got a lot tighter. I would say they were a lot more frugal in the way they would review an opportunity and made decisions about spending their dollar. Obviously, assets got sweated a lot more. That was the first thing,” Fujitsu group executive sales director, Mike Foster, said.
“The second was a look at the return on investment. The expected return got a lot shorter. A couple of years ago, people could turn around and justify something over a three- or four-year period. But all of a sudden, I had one particular client say to me in March last year – when things were the tightest – that if it doesn’t justify itself within nine months, we just can’t do it. People actually turned off projects even though they might have been already well invested.”
Thankfully, and as we all now know, the domestic economy was made of a tougher constitution and supported by other stronger economies – like China – Australia stepped out of the gloom to become one of the best performing nations in the world. We did so well that many now question whether we really faced a crisis at all. We were they now say, led on by many a pundit and talking our way into misfortune.
The point is moot now but the effects continue to be felt. Budgets have increased and the purse strings are loosening, but the mindset remains one focused on a hard return on investment, sweating assets to the full and risk management, particularly when it comes to IT projects.
Tough? Of course, but when isn’t business in the IT world a challenge? Some in fact see this kind of scenario as an opportunity to zoom in on the business efficiencies that IT solutions can generate when making that sales pitch. Telstra in the last couple of years, for example, has made a big deal out of what it calls the Telstra Productivity Indicator (TPI) – an annual report into the productivity of large organisations through Information Communication Technology (ICT) investments.
As far as marketing and sales tools go, this has to be one of the most elaborate ever created in Australia. By commissioning Sweeney Research to survey 300 government and large enterprise leaders across Australia, the project has the aim of investigating "the strong linkage between investment in ICT and improving productivity".
The survey was conducted through phone interviews with organisation leaders that had over 200 staff. The main findings were that a "productivity gap" had widened in Australian organisations with many prioritising productivity but being unable to "accurately measure and manage productivity improvements".
In this year's survey, only 42 per cent of organisations "can articulate their specific productivity measures and targets" compared to 49 per cent last year. In other words, our ability to manage productivity is slipping.
In the forward to the report, Telstra CEO, David Thodey, also noted "the report finds that while most organisations place a high priority on investment in ICT to drive productivity, only about a third believe that their ICT deployment is greatly aligned with the needs of worker groups".
Additionally, the survey found the top two priorities for organisations were improving customer service (78 per cent) and productivity (76 per cent).
There are criticisms the TPI doesn't contribute to our understanding of how to improve productivity through ICT investments, because it looks at components of productive work in a workplace (such as efficiency and working smarter, good service and satisfaction, increased profits, lowering costs, meeting targets and improving market share) instead of actually measuring productivity itself as expressed by the result of output divided by input. But it is supported by other research.
A 2001 project run by the Organisation for Economic Development (OECD), called the Growth Project, found productivity in the ICT sector can improve an economy's overall productivity.
However, measurement of the linkage between ICT and productivity is a challenge for economists and statisticians. The OECD noted that on the whole, ICT does have a positive impact on organisational performance and productivity, yet "uptake and impact of ICT differ across firms, varying according to size of firm, age of the firm and activity".
In its submission to the Senate committee on the National Broadband Network, the Australian Productivity Commission noted an "important contributor to Australia’s improved productivity performance in the 1990s was a competitively driven acceleration in ICT use across many industries including in the wholesale trade, finance and insurance sectors".
The main point is, however, that Telstra undertakes an expensive and extensive effort every year creating a report to help convince clients invest in ICT to help improve productivity. It speaks volumes to the difficulty in articulating the benefits of IT (or ICT) solutions to a business when you have one of the country’s largest corporations going to this extent to validate its sales message.
Yet, it also indicates the approach has merit and presents an example of the opportunity for other companies to help clients better understand the business benefits to be had from prudent IT projects.