Silver lining

Lionel Reina, VP EEMEA region, Orange Business Services, looks at ways regional operators can turn the economic downturn to their advantage by understanding the changing needs of their clients.

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By  Lionel Reina Published  May 20, 2009

As few people can have failed to notice, we are now in the midst of a global recession, the extent of which is still uncertain. Recent media reports state that, in a single day almost 80,000 jobs were lost or put under threat in the UK, Europe and US alone, and Oxford Economics predicts that 2009 will be the worst year since the Second World War in terms of global GDP.

The impact of the banking crisis so far is comparatively limited in the Gulf region: stable banks, less exposure to equities markets and the deep pockets of sovereign wealth funds all help to limit the exposure. In contrast, the real estate and oil sectors have been affected by the lack of availability of global credit and the falling industrial demand for energy.

Growth in the Middle East has slowed as the recession takes hold. In these challenging times, business needs to focus on fine-tuning operational efficiency, as well as go-to-market plans.

In this fast-changing situation, aligning IT with the emerging business strategies has never been more important in order to add value and reduce costs. Those that do will emerge leaner, more efficient, and better prepared.

Control and reduce costs - In many companies, where there are often different suppliers and no centralisation strategy, having a clear view of the total ICT and communications spend is a real challenge. It is becoming more important to identify those costs which may be hidden through a process, (for example a Total Cost of Ownership consulting assessment), that examines costs associated with everything from the infrastructure and assets to travel, data and communications.

reducing unnecessary costs - The lack of short-term credit is hampering businesses’ ability to finance their day-to-day working capital and reducing unnecessary costs should be the first line of defence for any business. At Orange Business Services in the USA, we estimated that the cost of workstations per employee at the beginning of 2005 averaged US $10,000 per year. The solution was to provide the tools so most employees could become home-based and to provide a smaller number of office hotdesks that could be booked when required. Today, the office space in the USA has been reduced by a factor of eight as a result of this programme with savings estimated at US$1.6 million per year.

Make the most of existing assets – It could be argued that ‘sweating’ assets makes good business sense at any time, but during a recession it is vital. A drop in ICT spend is expected in 2009 as the Middle East and North Africa (MENA) region begins to adjust to new market conditions , so improving the performance of existing network infrastructure will be high on the agenda. Simple steps such as optimising bandwidth or making the most of investments in existing IP telephony networks in order to limit communications costs can make a significant difference. Similarly, building services on top of existing networks to improve productivity or features can be carried out with limited investment.

Successful centralisation and consolidation - Failing to recognise the full value from a merger or acquisition in the present climate is not an option. Preparation is crucial in being able to combine and consolidate effectively the ICT and other back office systems of a business. This may require the rapid creation of a brand new infrastructure or the merger of ICT operations, so it is important to identify early on what is missing or what can be cut.

Increase flexibility and agility - An agile and flexible business is better placed to weather unpredictable market conditions. Consider ways of consolidating internal ICT infrastructure to facilitate operational processes, for example, virtualising servers and applications, employing managed services and outsourcing processes.

Application virtualisation centralises the management of everyday ICT, simplifying deployment and management environments and allowing easier upgrades to new systems and a greater likelihood that all security patches are kept updated without the associated back-end cost.

Innovate – While cost cutting measures are undoubtedly prudent, a ‘batten down the hatches’ approach to the tough economic conditions will only get you so far. Without innovation a business is in danger of stagnation and being overtaken by competitors who have found ways to use the crisis to their advantage.

Lionel Reina is the Vice President of Orange Business Services' EEMEA region.

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