IT Delivery in the Downturn

Responding appropriately to economic pressures

First published: December 2008

by Dale Vile and Tony Lock

KEY POINTS

Most IT professionals see challenges on the radar
Feedback gathered during a recent online survey of 1,125 IT and business people suggests that while only a minority of IT departments have felt the squeeze so far, four out of five are either expecting an impact or are well aware of the possibility of IT investment being hit as a result of economic pressure looking forward.

All parts of the economy will be affected; it’s just a question of when
Expectations of being impacted by the downturn are remarkably consistent across both geography and company size. Significant variation in terms of timing is seen by industry, however, with the highly challenged Financial Services sector, not surprisingly, being top of the list of those already hit by the crunch. The Travel and Transportation sector is second on the list, closely followed by industries reliant on consumer confidence such as Retail and Media.

Yet IT departments are keeping their heads
Despite the outlook, there is little evidence of panic or despair within IT departments. The majority of those who are expecting challenges are anticipating being able to contain the impact through selected cut backs and/or general belt-tightening. This is in stark contrast to the crash of 2001, which hit with very little warning in the middle of the dot com spending frenzy. This time around, we have been able see what’s coming well in advance, and the hit will be against the backdrop of the more conservative investment behaviour that has characterised the last few years.

To maintain control, take a proactive approach to enhancing efficiency
While it is sensible and prudent to plan for budget reductions, the ideal situation is for adjustments to be considered and agreed with the business on an informed and objective basis with a view to creating sustainable efficiency gains, not just one-off savings. This will sometimes require a degree of tactical investment. If you wait until cost cuts are strictly imposed, however, the chances are that you’ll have to work reactively with what’s in place already, which provides less room for manoeuvre.

The biggest difference can be made by thinking beyond IT infrastructure and operations
There is a lot more IT can do than simply looking at how costs can be reduced through optimising infrastructure and operations. The real differences come about from looking beyond this to helping the business optimise the way it uses IT, introducing new capabilities to drive business level efficiency, and thinking about how IT can assist the business in driving the top line – an important consideration at the best of times, but more so in an uncertain economy.

Now is the time to consider alternative funding and delivery options
There has long been the potential for far greater use of financing solutions in IT. If it is a while since you have looked at this area, now is a good time to revisit it. Over recent years, funding packages from large IT vendors have evolved, and new approaches have emerged from innovative specialists. Together with subscription alternatives to traditional software licensing and hosted delivery offerings such as Software as a Service (SaaS), there are now many ways to work around capital budget constraints. Use of such options could mean the difference between important projects being put on hold or going ahead to add business value and/or improve ongoing efficiency.


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