IT Investments CIOs Should Consider Before Recession Strikes

By Chad Chiang, Managing Director UK, Synology

When the slowdown in economic growth is inevitable, economic recession becomes the primary consideration in the minds of most business leaders. If a recession does occur in the short term, it will create an unprecedented financial cycle. According to Ryan Prindiville, partner in accounting and business advisory firm Armanino Consulting, 2022 will see record low unemployment in the U.S. but record high inflation. Therefore, the Chief Information Officer (CIO), IT director, or business executive must face historically high prices of technology and services. Even Apple Music, Apple TV+ and Apple One, for example, will be impacted by a UK price hike in December 2022.

Meanwhile, corporate performance has been growing at record levels over the past few years. So, you’re going to see a divide of opinion that business leaders, forecasters and seers have never seen before. I believe that it is common sense that companies will cut costs before the recession; however, cutting certain projects may have some negative impacts on companies. It is better to seize the opportunity to accelerate investment to improve the long-term efficiency of enterprises.

Some CIOs may want to move systems to the cloud because the business will want to have the ability to scale up or down in a controlled recession. But there are investments that

IT executives and CIOs need to make now to withstand a long-term downturn. However, investing in these projects is not necessarily a short-term solution. IT leaders should gradually plan for a more flexible environment, but a three to six-month adjustment timeline is required.

The important goal is to think about how to change the technology organisation comprehensively and consistently, to ensure that investment in important projects can expand the base and create flexibility for the enterprise. Here are a few areas that IT executives should give more thought to, in order to stay ahead of an uncertain economic climate; especially in areas where, recession or not, shifts can have long-term operational benefits.

1. Gain a deep understanding of cost and value structures. IT leaders should always have a deep understanding of cost structures and the value that IT services and investments can bring to the entire organisation. For executives who haven’t figured out how to establish transparency and clarity about their IT investments, now is the time to invest and create the system. Doing so will help IT executives make informed decisions that can save costs or support additional investments. In most business organisations, most of this information belongs to tribal knowledge (which refers to the knowledge owned by a specific ethnic group), which is not easy to obtain or act on.

2. Doubling Down on Agile Development Methods. If your organisation isn’t already investing in adopting agile development methods, skills and processes, use this downturn to give it a boost. Building an agile toolset is not something that can be done overnight. If businesses want to remain resilient through a potential economic downturn, now is a great time to start transforming. Adopting agile development methods allows IT to increase the frequency and depth of updates to corporate development programs to align with corporate development priorities and directions. Enterprises should adopt agile methods to ensure that systems in a constantly changing environment can perform corresponding functions for the enterprise. In challenging times, increase the frequency and depth of adopting agile methods, strengthen connection and execution capabilities, and enable enterprises to face rapidly changing challenges.

3. Increased investment to improve predictive analysis capabilities. A cost-effective investment that IT departments can make now is in the field of business predictive analytics and intelligence, providing organisations with better tools to gain insight into enterprise spend analysis. IT leaders should invest in more analytical capabilities, more useful and smarter reporting tools, and greater project financial transparency to help smart CFOs make better decisions.

4. Improve efficiency faster. It pays to act first before a potential recession takes hold; the CIO should promote and protect projects that will improve efficiency and productivity. IT executives should seriously consider project initiatives that would be at market risk if not accelerated. If the downturn does affect organisations, any cost-cutting or efficiency-enhancing measures implemented now will lead to a better overall position. We found that the IT departments of the top 10% of enterprises automated processes 2.1 times higher than their peers; and finally reduced the cost of operating and managing technology by 47%. Before the recession began, certain departments were already able to automate to a considerable degree, including HR, finance, and IT itself. Any IT executive concerned about the potential financial impact of a recession should focus on implementing technologies such as automation so that developers and systems integrators within the organisation can free up IT team members’ time for more impactful work.

5. Reallocate operating cost savings. During a recession, IT operating costs may naturally decrease. A smart CIO will shift some of those idle operating costs to new IT infrastructure instead of wasting that money elsewhere in the business or sitting in the bank. The CIO should effectively transfer these savings to equipment that improves infrastructure efficiency to accelerate the progress of existing projects.

6. Constant looking for the best alternative IT solutions to get the job done. Paying the big money on IT equipment doesn’t always guarantee the performance or getting the same value return, IT world and technology is constantly evolving, be open minded to try any available solutions that does the exact same job but with an affordable price tag, especially in the networking and storage area.

Tage Borg, Chief Technology Officer of Scrive , explains the preventative measures banks should be implementing to protect their customers

In the first half of 2021, criminals stole a total of £753.9 million through fraud, which represents a 30% increase compared to H1 2020. While advanced security systems managed to prevent a further £736 million from being taken [1] , it does raise questions about what other preventative measures banks should be putting in place to further protect their customers.

When blockchain technology is spoken about, most people tend to associate it with cryptocurrencies such as Bitcoin and Ethereum. However, we are increasingly seeing Blockchain technology rapidly disrupt other sectors including cybersecurity, politics, and data analytics.

One of the potential applications, which blockchain or “Distributed Ledger Technology” (DLT) is practically made for, is to make electronic signatures and contract management more secure. To understand how DLT can be implemented to make the signing process more secure and mitigate fraud risk, one must first understand the foundations of blockchain technology.

What is blockchain?

Blockchain is a decentralised digital database of transactions copied and distributed throughout a network which means once recorded, transactions cannot be altered, hacked, or defrauded. Fabricio Santos of CoinDesk compared it to “a series of glass boxes with content everyone can see and verify but can’t change.”

Unlike most conventional databases, composed of tables with columns and rows, a blockchain is made up of sequential blocks securely linked to each other using cryptography; meaning that if a single block in a chain is modified, it will be immediately recognised that the chain has been tampered with, prohibiting anyone from going backwards and covering their traces if they corrupt an entry.

How does it work?

Any digital file or group of files can be represented by a unique fingerprint known as a “hash” derived by a mathematical calculation based on a file’s raw digital information. The most minute change to a file will result in a different hash value. The hashes, not the files themselves, are the records that are stored in the blockchain. Therefore, it is possible to demonstrate that a file hasn’t been altered by recalculating its hash and matching the hash to its corresponding record in the blockchain.

Applying blockchain to e-signing

In the context of electronic signatures, DLT is an ideal approach to protecting document integrity after the signing process. Unlike other approaches such as certificates, which can expire, or keys, which can be decrypted with sufficient time or computing power, DLT is both time and hack-proof. DLT and e-signature software work in unison to guarantee the integrity of your document by sealing it with a digital signature. Blockchain technology provides a method of securing the digital signature by entering it into a permanent, verifiable public record. This means that in the event of a dispute, you can prove whether your document has or hasn’t been tampered with.

The perfect partnership for security, risk and compliance

In highly regulated industries like BFSI, one of the main challenges to implementing digital services, for traditional branches as well as challenger banks, FinTech and Insurtech companies, is meeting regulatory compliance. Paper documents can be easily modified, and signatures can be forged. In addition to the complexities of compliance, documents that are stored inside filing cabinets still risk being lost or stolen.

Implementing the public-permission ledger model in the context of DLT provides a hybrid of public and private blockchains where anyone can access them if they have permission from the administrators to do so. This provides greater transparency, making the audit processes easier, quicker, and less complex to manage.

Combining DLT and electronic signatures will help to store, protect, and ensure signature authenticity of your documents, making compliance with regulations such as GDPR easier. E-signature software features such as signing party authentication protect your agreements so that they can only be accessed and signed by the intended parties. Partnering with an eIDAS Qualified Trust Service Provider will help to further ensure the integrity of your document as their Qualified Electronic Signatures are regarded at the highest level. Electronic signatures serve as an electronic timestamp, adding an extra layer of protection to your document. Digital identity checks can also be integrated enabling the signing party to authenticate at any time, or any place, signing the document within the same digital workflow, speeding up customer transaction times.

The future of DLT and electronic signatures

So, what’s next for DLT and electronic signatures? How else could we see them being used? As more companies adopt blockchain technology, the concept of DLT being adopted in our personal lives doesn’t seem too farfetched. Digital signatures could represent you as a digital identity with the help of blockchain technology and the EU has already begun to explore this as part of the Digital Identity Wallet. Businesses that have already implemented and are familiar with DLT will have an advantage over those that are yet to integrate the technology as connecting and linking the Digital Identity Wallet with other distributed ledgers will be relatively easy. Furthermore, using electronic signatures in combination with DLT could significantly help reduce fraud as its structural design allows permitted users to check for fraudulent activity easily. This in turn lowers banking losses and improves overall operational costs, while enabling financial institutions to leverage the digital signatures for value-added services for their customers.

[1] https://www.ukfinance.org.uk/system/files/Half-year-fraud-update2021-FINAL.pdf