Beware the 'paradox of thrift' in a challenging economy

(Dec 23 2009) ERP Blog

Categories:
Technologies: Cloud Computing, CRM, CRM Blog, ERP, ERP Blog, Green IT, on-demand, SaaS, web-based

  1. Now is the time to make your ERP and CRM systems better, when costs are lower


    By Todd R. Weiss       ERP Blogger


    It's not quite, "Brother, can you spare a virtual server?" but times remain tough all over as the challenging world and U.S. economies continue their delicate recovery.

    Yet at the same time, opportunities abound. You just have to look closely for them, but maybe not as much as you imagine.

    I think we all need to go and spend some money. Individuals and companies, from small five-person IT shops to giant corporations. Now's not the time to keep cutting back on IT and its costs. There's no more fat to cut. We've all been watching the bones being depleted for over a year. Now is the time, while prices from your vendors may never be lower, to invest again so you are ready for the recovery that is desperately clawing for some traction.

    You think I'm crazy? You think you can't get blood from a stone or more IT money right now from your executive team? Well, maybe you are right. And maybe I am crazy. But hear me out for a minute.

    The one thing I do actually remember from Economics 101 at my alma mater, the University of Wisconsin-Madison, in my college days is the fascinating theory of the "paradox of thrift," refined by the late English economist, John Maynard Keynes. Back in the 1930s, Keynes argued that while saving money is wise and prudent in hard times, there can be a danger of individuals and businesses saving too much and not putting enough back into the economy through the buying of goods and services. And when an economy is having trouble, Keynes argued, that's precisely the time to spend money to help stimulate activity again. I always thought it was one of the most brilliant economic theories I'd ever heard. It's certainly the only one that has stuck in my brain for all these years.


    Not all economic experts agree, of course

     

    OK, you've probably been hearing that not all economic experts agree with Keynes' theory nowadays. Many say it's outdated and oversimplified and that the world's economic situation is far different than it was back in Keynes' time and during the Great Depression.

    Fine -- that all may be true. I'm not saying it's the same, but it doesn't have to be.

    Instead, if you look more closely, under the surface, what we have right now is a buyer's market in IT, from software to hardware to services to everything in between.

    IT vendors have been hurting for a while now as the economy began tanking arguably in late 2007 and nose-dived in 2008 into the beginning of this year.

    It took a lot of factors to get us into this mess, from the home and business loan crisis, to stock market factors, to deceitful investment "opportunities" that turned out to be massive and unprecedented pyramid scams. It's been a hellish time.  

    So guess what?

    Those hurting IT vendors – they need your business. They want your business. They'll do just about anything to gain your business.

    Still thinking I'm crazy? Go call a couple IT vendors and ask for something. See how quickly they fawn all over you with quotes, help, information, discounts and specials. Oh, did I mention DISCOUNTS?


    Now's the time to look at your CRM and ERP deployments


    So what's this mean to you and why am I telling you all of this?

    It's simple – go and talk to your executive team right now, because at this very moment, while they are telling you that you can't have the money for IT improvements, it's actually a great time to be buying. Vendors are hungry. They need to sell their stuff to get through the hard times of this economy, and they are offering better deals than you will get six months from now when the economic recovery begins to hum again. And it will hum again. So says history.

    Sounds like that "paradox of thrift" thing again, huh?

    Maybe Keynes wasn't so stupid after all.

    Imagine being able to get that new ERP or CRM software for 30% to 40% less than you would have paid two short years ago, along with a hefty throw-in service contract and other bonuses. Those kinds of deals are out there now, while the vendors are hungry, but believe me, they won't be there once the economy starts to rev again.

    You say you can't afford to buy this stuff now?

    The question should actually be, "can you afford NOT to buy this stuff now?"

    It will help your company. It will help your IT operations. It will help your customers. Remember them, your customers? They're the whole reason you're in business in the first place. If you always strive to help them, you will solidify your relationships with them, which is a good thing in the good times but an invaluable thing when times get tough.

    So, no matter how tight your company's purse strings are right now, it's time to take a new look at your IT systems, including ERP and CRM, and see what you need to be doing right now to get ready for the economic recovery to come.

    And it will happen.

    Will you be ready?

    Or will you be watching your competitors reacting smartly as your company stalls due to a lack of foresight?

    I'm not saying that it's going to be easy to find such money today. But find it you must, and spend it you must.

    Because you'll spend less than you would have spent yesterday or tomorrow, and you will be readying your company for renewed growth, success and poise for the future.

    And those are investments worth making, even in hard times.

    It's time to have those hard conversations and win some of them right now.

    That's what IT heroes do.





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