Recession assessment

Economic slowdown is a great time to evaluate and upgrade technology systems and staff

February 01, 2001 |

Whether it's called an economic slowdown or a recession, architectural, engineering and contractor firms have a unique opportunity to get their technology systems and staff in order during this soft business market. Now more than ever, technology can be used as the driving force to improve business processes as well as save tremendous amounts of money in the long run.

During the last half of the 1990s, the Y2K computer issue forced many A/E/C industry companies to make questionable decisions on repairing existing technology or purchasing new systems. Now, companies can use this market downturn to make improvements that will drive business to a new level.

Unlike firm operations during the recession of the early 1990s, A/E/C businesses are now totally dependent on technology, from desktop computers and software to high-speed Internet access. These technologies are not optional, they're mission-critical.

What follows are some common-sense guidelines to help A/E/C companies assess and improve their technology systems and staff.

Prepare an action plan

Instead of fighting off a slowdown in business, use the downtime to reorganize the firm's structure and introduce the best latest technology that will make the company more efficient and profitable when the downturn reverses. Evaluate the technology in operations such as design, engineering, construction administration, accounting, marketing and telecommunications, and decide what areas would make the most sense to upgrade or replace. Now is the time to build relationships with vendors and value-added resellers that can provide proper technology solutions.

Keep your IT staff

In most firms, the information-technology (IT) staff is considered overhead-in some cases, major overhead. Because of the shortage of good technical staff, IT employees are paid a premium. If the firm values their work, make every effort to keep the best people-they are extremely difficult and expensive to replace. Make the best use of IT staff members' downtime by having them work on technology upgrades that could not be done while the firm was busy with project work. Also, train the staff on the latest technologies and work out extended vacations or time off while the slowdown is in effect.

Best use of the IT staff is critical during this period. If funds are not allocated for technology enhancements, it would be wise for firms to keep the IT people at any cost, even if they work only on current projects while the economic climate changes. In any case, A/E/C firms should do whatever it takes to keep valuable IT staff.

Copying software verboten

Now is also an appropriate time to take stock of the hardware and software needs for all employees. Replace outdated desktop computers, consider acquiring laptops where they make sense and upgrade to the latest releases of software, including computer-aided design (CAD) software and construction administration software such as Expedition and Prolog.

Now is a good time for A/E/C firms to "get legal" and make a conscious effort to pay for the technology they use. Companies should take an inventory of their hardware and software, and contact the various software vendors for their current licensing guidelines. Every vendor has a different set of rules for software licensing, including multi-user versions, network licensing and home-use rules. Be aware that certain vendors, most notably AutoDesk and Microsoft, have been aggressively searching for companies that illegally copy their software.

The Business Software Alliance, an international organization representing software and e-commerce developers, provides free information and tools to help companies work through the licensing process. Visit the organization's Web site at

Replace communications systems

This is an excellent time for companies to review their communications systems, including internal wiring for phone and data, private-branch exchange (PBX) and voice mail, call accounting, local and long-distance phone services and Internet access. With so many companies fighting over these extremely competitive markets, A/E/C firms should at the very least hire a telecommunications consultant to review their current systems and determine if a new system would make sense. The cost of replacement systems-as well as the monthly maintenance costs to operate them-has drastically decreased.

High-speed wiring schemes such as fiber optic and Gigabit Ethernet should also be considered.

Lease or buy

Companies should also review technology acquisition methods. Depending on the structure of ones business operations, leasing or buying may make sense. For big-ticket items such as servers and telephone systems, a three-year lease may make sense, because the system can more easily be replaced at the end of the cycle. In most cases, the monthly costs could possibly be reduced as old leases come to term and new leases for replacements are signed. Leasing, however, may not make sense for every company, so it is wise to consult financial staff first.

Examine possible outsourcing scenarios for systems in place. In some cases, it may make sense to outsource certain services such as intranets, extranets, e-mail, databases and accounting systems in order to reduce in-house staff costs. Companies such as Intel, Compaq, PSINet and Exodus offer outsourcing services for these types of applications. These companies offer high-security data centers and trained staff members.

Moreover, many reprographic companies offer complete on-site facilities management of systems, such as large-format plotters and color laser printers. Small and medium-size A/E/C firms that cannot afford full-time IT staff may consider this type of outsourcing as an option.

Review and renegotiate contracts

Many firms renew contracts for maintenance of technology systems without even asking simple questions: Can the contract be renegotiated? Is the equipment worth the need to maintain? Is it time to replace the equipment? Is the equipment still in existence? (I once new of a company controller who would blindly sign renewals for service contracts on equipment that had been out of service for years.)

When a contract is up for renegotiations, get bids from other vendors as well as the current vendor. Give preference to the current vendor if it has performed well, but never sign a new contract blindly without asking. Review the contract to see if all the components are needed or if the cost can be reduced with a lower level of service. Also, carefully assess whether certain systems even need a service contract. Major mission-critical systems such as telecommunications must be under a service contract, but smaller, ancillary systems-such as small-format printers and desktop computers-may not need a service contract.

Simple, yet effective

As simple as these key points are, they may save companies a tremendous amount of money in the long run. Whether the A/E/C company is a small, five-person design firm or a multibillion dollar global construction company, it is driven by technology. Invest wisely now and save later.

Tom Hernandez is associate principal and manager of computer operations for the New York City office of Kohn Pedersen Fox Associates PC. He welcomes comments through the Internet at

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