Business

After the Fall: What's Next for the Economy?

Ready for 2009? At this time last year, we were wondering how far down the economy would go . Now we know: way, waaaaay down. And at the moment, it feels like there's no end in sight -- so it's strange to think that this year IT will lead the way to recovery.

But that's exactly what you should be preparing for.

Why? Because as bad as things look right now, the economy is likely to turn around much sooner than you expect.

Here, look: The current recession began in December 2007, according to the National Bureau of Economic Research, which charts the peaks and troughs of business cycles. The average recession since World War II lasted 10 months; the longest postwar slumps (in 1973-75 and 1981-82) lasted 16 months.

If we're in a 16-month recession, the economy will bottom out and start growing again in April.

Even if we break that postwar record, this recession will almost certainly end within the next 12 months. Except for the Great Depression, no U.S. recession has lasted more than 24 months since 1885.

Conclusion: We'll start coming out of the recession sometime this year.

But if the end is near, why does it feel like we're still in free-fall?

In part, that's because we're all comparing this downturn to the one we remember best: the last recession, in 2001. That lasted only eight months, and things are worse this time around. Instead of the Y2k anticlimax followed by the dot-com bust followed by a recession, we've got a housing bust followed by a credit implosion followed by a broader, deeper recession.

Another reason is that recessions aren't evenly distributed, and neither are recoveries. Some regions -- and some industries -- will be hit harder or sooner. Some will get off easy; a few will be spared entirely. Others will be hit relatively late, and the effects will linger longer. Depending on our locations and our businesses, we really are at different points on the curve.

Mainly, though, we feel the fall because right now we're still tightening our belts and battening down the hatches. We're living in the present, and there's a lot of hard work to be done before we can start looking ahead to a recovery.

That feeling is natural. But it's also a missed opportunity.

See, though we're in belts-tightened, hatches-battened mode, IT can still lay the foundation for a fast start when conditions improve.

True, you don't know exactly what your business will look like when the economy starts to grow again. You don't know how your competitors will fare or what technologies will be the best fit.

But while you're ruthlessly paring down your project portfolio (rule of thumb: Freeze everything that doesn't have an enthusiastic sponsor and a finish line in sight), you can ask probing questions to learn about the business strategy each project serves.

While you're making the hard staffing decisions, you can start cross-training everyone to do operations work. Projects are sexy, but operations are essential -- and the more flexible your people are, the better you'll function with a smaller staff now and a rebuilt staff later.

And while you survey the shreds of your budget, you can map out cleaner ways of handling development, operations and IT governance.

In short, you can prepare so that when the turnaround comes, your IT shop will know what the business needs -- and deliver it.

This recession will end in 2009. Until it does, do more than just survive.

Get ready to lead.

Frank Hayes is Computerworld 's senior news columnist. Contact him at frank_hayes@computerworld.com.

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