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4 ways the fiscal cliff will impact CIOs

Jonathan Hassell | Dec. 21, 2012
Odds are, Jan. 2, 2013 won't begin any differently than your last work day of 2012. Even if Congress and the President reach a deal, though, CIOs will feel the impact of the fiscal cliff as the new year progresses. Here are four lessons you should apply to the 'new normal' that austerity demands.

It's a steep cut, to be sure, but of particular interest to CIOs should be where a substantial portion of those cuts are originating. Around 25 percent of the job cuts will come from reductions in its technology and operations group, run by CIO Don Callahan. According to The Wall Street Journal , Citi plans to achieve greater efficiency through increased standardization and the use of automated processes.

Sound like a familiar refrain? When the economy cools off and consumer demand drops, budgets need to adjust. This may even involve personnel reduction requests, which are never pleasant. There may also be a focus on reducing large, fixed, one-time capital expenditures-this is particularly true if your organization operates under the section of the tax code where some capital expenditures were able to be deducted 100% in the year they were incurred, not depreciated over several years-and translating those into variable operating systems that hopefully reduce themselves when used less and expand only when necessary.

Generally, this will mean delaying or deferring hardware requests and engaging more with cloud-based services that become variable expenses that flex with load and usage. Your giant, expensive refresh projects will probably end up on hold or scaled back significantly making it a fine time to invest in automation, to extend the life and functionality of your existing assets, and in the cloud.

3. A Longer-Term View to Fiscal Reckoning, Reconcilement

The fiscal cliff is getting a lot of attention, probably because it is a fixed date with tangible repercussions and consequences that everyone in power wants to avoid, but the story is much bigger and longer term than even 2013. We may be grappling with yet another "new normal" as the United States-and the world as a whole, to a degree-get their fiscal houses in order.

As Wells Fargo senior economist Mark Vitner said in a December interview with the Charlotte Business Journal , "The fiscal cliff is the beginning, not the end. Fiscal policy will continue to restrict the economy, and the bite from taxes will continue to get higher and higher as deductions get whittled away over time."

A resolution to the fiscal cliff, if it comes, is by no means the end of the challenging time. The moves you make during this period of uncertainty-investing in certain kinds of staff, shifting services and producing consolidation savings, and identifying new business opportunities within the information you already have-will set you up well for the future as the economy continues to internalize the effects of getting back on a positive track.

4. Big Data Becomes Ever More Important to Tease Out Hidden Opportunities

Your organization has tremendous data sets that grow larger and larger over time. In this body of work there is information on customer purchasing trends, website visits and habits, customer review data and so on.

 

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