Putting IT to good use in a recession

Credit crunch, downturn or recession ­- call it what you will, 2008 is likely to be a difficult year for the UK and the global economy. How should chief information officers (CIOs) best prepare for the changing nature of economic conditions, and how will their preparations help to improve business efficiency? Our panel give their views:

Economic uncertainty requires that our IT strategy and programme of work mirrors our business strategy, but it also anticipates changes in circumstances and business priorities. I work closely with our business domain experts to understand their evaluation on how the economic situation may impact business.

Using such insight, I can generate a minimum of two alternative portfolios to match potential circumstances. Also, there are likely to be projects I want to complete to drive the planned benefits; for example, cost reduction or business generation. And depending on business priorities, I may need to expedite specific projects to deliver the benefits sooner rather than later.

Getting IT running costs to an optimum level is another way of helping the company to ride out economic slumps. I say optimum level due to the essential balance between service cost with the quality of delivery. In my experience, service level is something you continually have to review, whatever the economic pressures ahead.
Jeff Roberts, chief information officer, Norton Rose

Every CIO will be running a tight ship this year, having already managed a robust process of centralisation and consolidation of the IT infrastructure ­ and having sensitively introduced the selective use of outsourcing to optimise the cost.

CIO Connect recently found ­ in comparison to 2007 ­ that IT budgets are likely to stay the same for 45 per cent of technology leaders, and will increase for 32 per cent of organisations. Only 23 per cent of firms say their 2008 IT budget will be lower than last year.

Our members plan to make more of virtualisation technology and increase the level of outsourcing. What differentiates our leading CIO members is their ability to deliver. Vanguard CIOs will always be well-prepared and able to accommodate business change. They will have thought through various scenarios and worked plans through with their executive-level colleagues.
Alistair Russell, development director, CIO Connect

While nobody should be in doubt that tighter belts will mean CIOs paying close attention to supplier performance metrics, it will not be simply the case of the thumb screws coming out once the share price falls.

That said, users will prepare for the future by looking carefully at their tactical supplier relationships ­ such as offshore providers ­ and ensuring that commoditised services provide the best value.

Such analyses could mean markets in less well-known offshore locations get a boost. Business efficiency will be improved by CIOs continuing to innovate aspects of IT that are commoditised or central to the business.
Ollie Ross, director of research, The Corporate IT Forum

For businesses with global reach, we note that the clouds are gathering rapidly over the UK, US and Japan, but some other parts of the world are doing fine. CIOs should anticipate and plan for business leaders rapidly switching activities and priorities towards growth regions.

Do not set your 2008 project portfolios in stone, but do warn your management team to expect changes at short notice. For example, the project to expand server capacity in China might be accelerated, while the laptop upgrade in the US is postponed.

Most economic forecasters are suggesting a U-shaped short-run downturn, followed by recovery. But you should also start considering the possibility of an L-shaped scenario, with two years of economic doldrums. So do not be tempted into just kicking suppliers hard to make your numbers. Think more strategically ­ you might need a lot of goodwill from them in 2009 and beyond.
Mark Raskino, research vice president and Gartner fellow

In many ways, the coming year will be a continuation of business as usual for a CIO, and the requirement to concentrate on reducing cost will be a stronger rather than a new pressure. So what can you do in a “cash is king” environment, where big capital projects are harder to justify?

Understand exactly where your cash goes and then meticulously attach costs with a self-funding programme. Also, look at the software tools you use, what can you lose and can you break from the payments?

Green computing is helping technology leaders realise considerable benefits, and you should consider environmentalism, even if only for the most inefficient elements of your infrastructure.
John Proudlock, transformation director, Vertex Financial Services

2008 will be a challenging year for CIOs. Because of the uncertainties in the economic outlook, IT leaders can not assume tough times for their business, but they cannot ignore that possibility. So, prudent CIOs should be preparing contingency plans.

Most technology leaders know where to look for savings in the IT budget: delays in capital investment in equipment; cutbacks in contractors and consultants; cancelling projects with marginal returns on investment; re-negotiation of vendor contracts; and greater use of efficiency tools such as outsourcing or consolidation.
Calculate potential savings and risks, then identify projects or investments that need decisions now.

Any decisions to make cuts should be made by the executive committee, not by the CIO. By preparing in this way, the CIO will provide business leaders with the information they need in order to make intelligent decisions.
Andrew Bartels, vice president and analyst, Forrester Research