Economy Puts IT Into Penny-Pinching Mode

Some technologies (think SaaS) may see increased use because of the downturn. But for many IT execs, scrimping on spending is now the order of the day.

With the economy struggling and financial markets in a state of chaos, this is becoming a hard time to be an IT manager.

Possible staffing reductions topped every how-to-survive-the-recession list that Gartner Inc. analysts presented at the consulting firm's Symposium/ITxpo conference in Orlando this month. They said IT execs should prepare for measures such as hiring freezes, job cuts and the elimination of management layers.

And while Gartner still expects IT spending to grow by small amounts this quarter and during 2009, projects with high price tags and lengthy returns on investment may be a hard sell internally. Caution will likely be the watchword at many companies -- for IT as well as other departments.

IT managers can try to push back by demonstrating that technology investments can make a difference for their organizations from a business or financial standpoint. For instance, state and local governments hurt by tax-revenue declines may be able to offset some of the lost income by expanding online self-service capabilities on their Web sites.

Also, there is expected to be continued demand for storage technologies and for business intelligence tools that can help users evaluate spending plans and business risks. Ironically, demands on IT may grow because of spending cuts. For instance, if PC replacements scheduled for next year are put off because of economic concerns, help desk calls from users will likely increase.

New technologies that can help companies avoid hardware upgrades and other capital-equipment costs -- for example, cloud-based software-as-a-service (SaaS) offerings or server virtualization software -- also may get more attention.

The University of Cincinnati is adopting a SaaS strategy for e-mail, according to Mark Young, the school's infrastructure manager. Young said the university is close to signing an agreement with Microsoft Corp. to use the vendor's Exchange Labs hosted e-mail service instead of its current messaging system from Mirapoint Software Inc.

Switching to the Microsoft service is attractive partly because it promises to deliver immediate financial benefits, Young said. Microsoft, which offers Exchange Labs to colleges as part of its free Live@edu suite of collaboration tools, will take care of storage costs and some of the other expenses of providing e-mail to the university's users. That will let the school reduce its spending on hardware and systems administration and free up IT staffers to do more productive work.

But on other IT initiatives, Young said, the university plans to proceed cautiously and watch what other schools do to see "what saves money and what doesn't."

Blair Mandryk, global IT manager at Haworth Inc., a Holland, Mich.-based office furniture maker, had been looking to cut his technology costs long before the recent economic events began unfolding. For instance, his staff previously reduced 450 physical servers down to 100 boxes through the use of VMware Inc.'s virtualization software.

But nowadays, Mandryk said, IT managers also have to find ways to expand services to end users without necessarily being able to increase their tech budgets. "The business is still expecting IT to deliver, so without having the money to do it, you have to find creative ways," he said.

Mandryk predicted that SaaS "is going to be a huge trend," partly as a result of the economic downturn. A year ago, he wouldn't have considered SaaS technologies himself. Six months ago, "probably yes," he said -- and now, "absolutely."

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