Enterprise Architecture — Adjusting to a Recessionary Period
As the global economy looks likely to enter a recessionary period, we can anticipate that companies will:
- reduce or eliminate employee hiring
- reduce contractors
- reduce corporate budgets and more carefully watch expenses
In previous prolonged recessions, we have also seen companies ‘manage out the bottom x%’ of employees.
Entering a recessionary period is typically a gradual process — a downward spiral that takes time. Some companies will more quickly “tap the brakes” on spending and hiring in anticipation of a recession — other companies will be more optimistic and continue to spend and hire until they see direct impact to their sales.
As such, your company’s adaptation to a recessionary period will evolve based on how specific business results are affected. As a recession becomes more evident, we will see a more consistent approach across most companies.
How will Enterprise Architecture adapt to a recessionary period?
Business Transformation → Business Optimization
I anticipate that the popular focus on Business Transformation over the last 5 years becomes more of a focus on Business Optimization. A confluence of factors, such as headcount constraints, budget reductions and a need to focus on profitability, will move most conversations to optimizing business.
Enterprise Architecture aligns to the company’s business optimization goals and helps IT create a future-state enterprise architecture that, in turn, helps achieve the business optimization goals. During the past 10 years, we have seen strong growth in all industries, a strong stock market and strong hiring. Companies have enjoyed the luxury of having the ability to invest in their business transformation programs, had the funding to hire qualified SIs to help them execute their transformational programs and had the funding to hire the employees necessary to execute their plan. In a recessionary period, budgets/headcount are tighter.
For all companies, profitability will be critical in a recessionary period.
We can anticipate and therefore plan for a few changes:
- Hiring Effect — hiring slows or freezes; worst…