IT pros tackle economic crisis head-on

IT working closer with the business side to weather the storm; less emphasis on cuts

ORLANDO -- The financial crisis facing many companies today was front and center here at SIMposium 2008, where IT leaders gathered to share insight on how high-tech executives can use their experience to help businesses weather the current economic storm.  

More than 600 people attended this week's Society for Information Management (SIM) conference, which focused on technology trends and business strategies facing IT professionals. The industry organization shared the results of a June survey of 300 SIM member organizations. Among other things, the study reveals that IT professionals saw the economic downturn coming and have been preparing to cut the fat and operate more efficiently.  

Still, the talk of an imminent recession doesn't instill the same panic many IT professionals experienced in past downturns, SIM officials said.

"This downturn is different. In the past, IT has been told by the business to cut, cut, cut. And both IT and the business have paid dearly for that," said Jerry Luftman, SIM's vice president for academic affairs and a distinguished professor and associate dean at the Stevens Institute of Technology. "Rather than panicking and making drastic cuts, IT has been working more closely with the business for years and is being strategic about how to weather the economic issues now."

SIM survey results also showed that among IT's strategic plans for the coming year, cutting IT costs landed "dead last" among 40 options for respondents' expected actions in 2009. Granted, Luftman said, the survey was taken a few months prior to the failure of several financial firms and the chaos on Wall Street, but IT has been operating more efficiently for the past several years and cutting isn't the most practical option for many IT departments.

"IT can think about how it can cut in terms of variable costs, but there aren't as many obvious areas to cut," Luftman said.

IT's efforts this past decade to integrate itself into the business is part of the reason IT isn't the first and obvious place to slash costs, according to one presenter at the show. Chandra Olson, enterprise architect for Lockheed Martin, hosted a session on innovative technologies and said that while news about the economy remains negative, IT has positioned itself as an enabler to business.

"The economy is grim, but unlike 2001, IT is embedded in running all aspects of the business," Olson told attendees. "We do multiyear projects, and that makes it more difficult to cut. IT lags about two to four quarters behind the overall economy, but the slashing of the past is over."

Others attending the show commented informally on how they are dealing with the economic crisis facing their companies today. Many IT professionals are considering alternative approaches to straight budget cuts. For instance, several plan to halt hiring and cut back on consultants. Others say they will stretch planned 2009 projects over two years to lessen the budget impact. And while budgets may remain flat, the general attitude among attendees had not yet reached a panicked state.

"It would be a significant understatement to say that IT is facing cost pressures and is being asked to do more with less," said SIM President-elect Peter Whatnell, who joined Sunoco as CIO in November 2001 after working at Texaco for 17 years. "But I believe one should never turn down the opportunity to exploit a crisis, and organizations are more willing today to take a risk to get a benefit."

Whatnell said today's cost-cutting measures differ from those used in the past, because IT offers the business a few options from which to choose. IT organizations can do less by halting specific projects. For instance, IT can tell the business it has several projects planned and query which the business least needs to get done in the immediate future. IT can also reduce service levels by, for instance, increasing the amount of time the help desk has to respond to user support requests. And lastly, Whatnell said, IT can gamble a bit and take some risks by, say, changing planned disaster recovery scenarios from four hours to four days.

IT can choose to avoid spending disaster-recovery money now, and take the chance that there won't be a disaster, or it can try to determine how much of a loss not having systems back immediately will represent to the business, he said. "But what is critical," he added "is that IT is posing these choices to the business, and none of these options can be done by IT alone. It must be a joint decision."

This story, "IT pros tackle economic crisis head-on" was originally published by Network World.

Copyright © 2008 IDG Communications, Inc.

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