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Budget tips for the new year

IT budgets aren't budging, so IT execs will squeeze value from projects that deliver quick ROI and long-term savings

By Julia King
December 29, 2009 06:00 AM ET

Computerworld - Follow the IT money in 2010, and it will lead to yet more projects designed to cut the cost of doing business. You'll also find a slew of smaller-scale initiatives that have a relatively quick payback or are laser-focused on a wider enterprise business goal, such as improving customer service or product quality. Moreover, an increasing portion of what are shaping up to be relatively flat IT budgets at most companies will be devoted to streamlining and offloading rather than bulking up internal IT infrastructure.

At $3.5 billion Sunoco Inc., for example, CIO Peter Whatnell explains that he is in the process of evaluating Google Apps and other so-called cloud offerings in conjunction with an overall desktop virtualization initiative.

"Our immediate goal is to reduce internal costs," says Whatnell. "Sunoco has 8,500 users, but 50% to 60% of them only need access to two or three office productivity applications. We're looking to see if there's a way to provide those without the support costs associated with Wintel on their desktops."

As part of the same cost-cutting initiative, Sunoco plans to move several hundred users to thin clients on the desktop, which will be connected to "everything virtualized on the back end," Whatnell says.

"If there's a problem, we have UPS deliver a cardboard box with a new [thin-client] device," he explains. "The user plugs it in and gets access to back-end applications. The mailroom becomes our desktop technician. It's the long-term ownership costs we're looking to take out."

IT executives are feeling the squeeze. A little less than one-third of the 312 respondents to Computerworld's 2010 Forecast survey said they expected their organizations' IT budgets to kick up in the new year. Most are dealing with flat budgets. And 37% said budget constraints and economic pressures are the No. 1 management challenges they will face in the next 12 months. Therefore, removing long-term IT costs is the main goal and will remain so throughout 2010, CIOs say. The key rationale for technology investments will be to save even more money down the road.

Sharp Eye on the Future

Bargreen Ellingson Inc., a restaurant supply and design company in Fife, Wash., is in the midst of a $5 million, multiyear ERP implementation project that it started in February 2008 -- smack dab in the middle of the recession. This year, with the foundational elements of the ERP system in place, the company will begin leveraging the system's business analytics capabilities. Also high on the IT agenda is collaborating with the business to streamline various processes, such as managing inventory, to take full advantage of the new IT capabilities.

"A couple of years ago, we knew the current economy was on the horizon and that we were headed into a recession," says Bargreen CIO Jeffrey Greenaway. "We purposely decided to take on a new ERP system because we wouldn't be going at 110% and we could bring in the necessary business people who can't afford to dedicate themselves to this kind of project during busy times." In 2010, he says, it's all about taking out costs by finding and implementing ways to make the business more efficient.



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