By: Jennifer Kavur - Computer World Canada (28 Nov 2008)
A recent poll of members of the Canadian Advanced Technology Alliance (CATA), verified by leadership roundtables with senior public servants, revealed what Canadian financial managers can do to prevent tumbling further into a global recession.
Governance is key, said Barry Gander, executive vice-president of CATA. “As the current crisis indicates, if you get the governance wrong, the whole house of cards fall apart," he said. "What happened in the United States was that there were no real regulations for how you should govern the mortgage sector. The mortgage sector grew and became troubled because people were able…to buy houses with essentially no collateral in the game. That would work as long as the market kept expanding, but when the market stopped, then everything else collapsed. The lack of awareness of that potential for destruction that hit the private sector continues to this day,” he explained.
1) What does not get measured does not get improved, so measure, benchmark and report progress in a dashboard.
2) Use modern technology to manage information and get feedback loops in place.
3) Be more transparent about what you are doing or plan to do. More proactive disclosure, especially for Crown agencies, is needed.
4) Conduct “ethical reasoning” training everywhere. A code of conduct is OK, but not enough.
5) Manage your information as an asset and as a resource…both the public and private sectors need it.
Transparency and accountability are two things that can absolutely be done, said Jennifer Parier-Knox, senior research analyst at Info-Tech Research Group. “In many cases, especially in the United States as well as Canada, it’s becoming a legislated mandate at this point,” she said.
“There a real distrust of financial managers and leaders right now, at least in North America…as much transparency as possible is actually to the benefit of people in those roles and it also allows more people to potentially identify problems that are on the horizon as opposed to getting nasty surprises,” said Parier-Knox.
In addition to taking the appropriate steps for financial recovery in Canada, financial managers who follow CATA’s advice could become role models to the rest of the world. “We can energize our society and promote Canada as a model of how to attack the global crises, if we take the steps needed to make ourselves masters of 'Governing Smarter,'” said Gander.
Canada has an invaluable reputation regarding many aspects of our governance structure, said Gander. “The U.S. is, of course, the main actor in the piece and there’s no denying that its power and impact are enormous…but Canada itself has, I think, a better ability to change fast, to build on the strengths it already has and to achieve the kinds of governance and modelship that can point the way to how that crises should be handled,” he explained.
The recession in Canada has just begun, Parier-Knox pointed out. “There’s still plenty more to come. We’re just at the beginning of it…we think that it will probably peak at some point within the next six to eighteen months.”
“There were decisions made a number of years ago that has put Canada in a slightly stronger position, but given our trade links and our business links to the American economy, there is only so much that we can do in terms of having control. We’re talking about a worldwide economic crises. Being part of the world, it can’t be avoided,” she continued.
“I think we have a stronger banking environment in Canada upon which we’ll be able to rest, so you won’t see the same kinds of hits happening at the consumer level in terms of homeowners…there will be some right sizing in terms of housing evaluations…but we’re not going to see the complete bottoming out that we’re seeing in the United States and other areas of the world,” said Parier-Knox.
IT is better off than many other industries in Canada, according to Gander, because half of the IT exports are not going to the United States. “We’re more of a global player than many other sectors in Canada, which can go up to 80 per cent in terms of their dependence on America per say. I’m not trying to say that America isn’t bringing the rest of the world to a bit of a halt as well, and the rest of the world will slow down, but there are sectors around the world that are not hit as hard as America,” he said.
Financial managers at IT companies that manufacturer hardware and software should be careful not to reduce spending on resellers, advised Parier-Knox. "The one thing they should avoid doing is cutting the investment in those resellers because those resellers are basically their lifeline to the market. If they reduce spending on supporting their reselling channels, they could be hurt quite dramatically...they should really avoid a temptation to do that,” she said.
“We’re seeing some early spending changes in IT and IT services firms,” said Parier-Knox.
Some Canadian IT companies, such as Research in Motion, have yet to exhibit signs of change. “Going into the holiday season with the new Blackberry and launching some new models, they are doing business as usual…this holiday season is gong to be very telling in terms of consumer spending. We’ll have a better idea come January if things have dropped off. I don’t think it will necessarily hurt companies like RIM,” said Parier-Knox.
However, U.S.-based companies with offices and divisions in Canada, such as Cisco, are already announcing cutbacks. “They are closing their office for five days between Dec. 29 and Jan. 2. That’s unprecedented. When we look at the Canadian branches of American and other international IT firms, there are going to be some changes on the horizon…given their market is not necessarily a Canadian market,” said Parier-Knox.
6) Simplify and standardize public service operations…confusion is rampant and it is impeding progress.
7) Excessive auditing and review processes lead to fear of action and paralysis…so reward good behaviours.
8) Address staff retention issues, as they have a huge impact on the quality of service to Canadians.
9) Work with the private sector….it’s good for both sides.
10) Keep a “Made In Canada” solution. Do not outsource government jobs to other countries.
According to Gander, transparency and accountability are two key skills financial managers must embrace. “People in the United States were operating in the dark and they are still are operating in the dark right now. They don’t know what the depth of the crises is, they don’t know who to bail out…so there are big gaps in the knowledge of who the main actors are and how deep the crises is,” he said.
“Unless you know who’s accountable for pulling everybody out of the crises, you aren’t going to have any confidence in the system at all and you will continue to blunder from one mistake to another and that’s the case today in the United States,” Gander continued.