While the US economy has enjoyed excellent growth in recent years, as the old saying goes, “What goes up, must come down.” While we don’t exactly love talking about it, sooner or later, another recession is inevitable. How long, how bad and how painful that recession will be is anyone’s guess, but experts predict the timing will be soon.
In a February 2019 survey of 281 members of the National Association of Business Economics, 77% of the economists polled expect a recession to hit by 2021. The results were echoed In the 2018 Duke University/CFO Global Business Outlook Survey, where 80% of CFOs polled expected one even sooner – by the end of 2020.
Now is the time for businesses to begin planning their response strategies (if they haven’t already) to come out the other side of a potential downturn stronger, or at the very least, circumvent catastrophic losses.
One approach many companies have begun taking is investing in business intelligence technology that helps them build a more financially sound operation and mitigate some of the risks of a sudden economic downturn.
According the Dresner Advisory Service’s 2018 Wisdom of Crowds® Business Intelligence Market Study, the top two objectives companies look to improve with their BI tools are decision making and operational efficiency. Investments in these business performance technologies now may lend some clarity to potential cost reductions and profitability improvements that could help companies avoid losing valuable talent and assets later when they’re just trying to stay afloat.
Nearly 70% of respondents in the Dresner study identified improved operational efficiency as a “critical or “very important” goal for their BI tool. For our clients, Catalyst can be extremely helpful in this area, streamlining operational planning and rooting out inefficiencies hidden deep inside their companies’ operation.
The ability to slice, dice and drill down into data from any angle with Catalyst makes finding cash-diluting anomalies and making data-backed decisions a fairly quick, straightforward and repeatable proposition, rather than a once-a-year exercise that may take months of your team’s valuable time.
But what if you’re caught in the middle? What if a recession hits while you’re still shopping for, or transitioning to new business performance software? Traditional thinking might tell executives to batten down the hatches and wait until the recession passes before making the investment. A new article from Harvard Business Review contends that might be the exact wrong response.
Economists cited in the article theorize this would be a great time to invest in technology because opportunity cost is lower during a recession. Per the article: “When the economy is in great shape, a company has every incentive to produce as much as it can; if it diverts resources to invest in new technologies, it may be leaving money on the table. But when fewer people are willing to buy what you’re selling, operations need not be kept humming at maximum capacity, which frees up operating budget to fund IT initiatives without dampening sales. For that reason, adopting technology costs less, in a sense, during a recession.”
We would add that until you’ve actually drilled down into your operations and examined it from multiple angles, you may not fully understand what maximum capacity even is. In this period of strong economic growth, inefficiencies and blind spots in your business intelligence may be holding you back from hitting your true maximum potential. So, in the case of adding the right business intelligence/performance technology, sooner is, more often than not, better than later – regardless of macroeconomic conditions.
For our part, however, we’ve actually taken measures to minimize the time cost of a Catalyst implementation for our clients with our FASTR™ Process. This process cuts the Catalyst implementation down to a quick 4-week process, best-in-class speed and a far cry from the costly 6-8-month implementations from some of our competitors.
The way we see it, by taking less time to implement with FASTR™, we’re lowering the total opportunity cost, turning around ROI more quickly and helping our clients plug the holes that are draining cash from their operations sooner. In this case, time literally is money, and our FASTR™ process gives you more time.
Regardless of the macro-economic conditions, the effects of boosting your business performance with better intelligence are going to be a huge net positive. Setting your plan to upgrade this aspect of your operation now may prove to be the critical difference between success and failure the next time the bubble bursts.
How are you using business intelligence to protect yourself against the next recession? Do you think it’s better to implement new technologies during a boom, or a slowdown? We’d love to hear what you think. Sound off on social media now and join the conversation.