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.

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Use What You Have

Since many companies are likely to put off IT upgrades until the economy improves, another strategy for coping with the downturn is to get the most out of what you already own.

Chris Mincay, an IT procurement manager at a grocery chain that he asked not be identified, said he's looking at ways to make better use of the applications that he himself relies on as part of his job. "Sometimes applications are so sophisticated that you only use a certain percentage of [their capabilities]," he said.

Scotty Bryan, CIO of the Kentucky Higher Education Assistance Authority in Frankfort, is trying to trim IT costs wherever he can -- a process that began earlier this year when credit tightening put a big crimp in the student loan business.

According to Bryan, the authority's IT department has been managing disks better to increase the available storage capacity, getting rid of software modules that aren't being used and shifting users to electronic documents to cut down on paper consumption. Job vacancies in IT aren't being filled, and purchases are being reviewed much more closely than before, he said.

At the Service Employees International Union in Washington, CIO Charles Everett said he expects to be asked to help find ways to cut overall operating costs. SaaS is an option, he said, although he isn't sure it would cost less in the long term compared with continuing to run software in-house.

"I think [SaaS] is always going to be more pricey than doing it ourselves, but we will see," said Everett, who is also looking at increased IT automation as a potential cost-saving option.

Not everyone is cutting back. John Chambers, CEO of Cisco Systems Inc., said during a Q&A keynote session at the Gartner conference that he plans to increase the networking vendor's IT spending by 10% next year, regardless of what happens to the economy. Economic slowdowns can be used to "gain huge competitive advantage" by companies that see IT as "the enabler of business strategy," Chambers said.

After the keynote session and in interviews conducted with IT managers near TV monitors that showed a CNN report on yet another Wall Street sell-off, it was impossible to find anyone as enthusiastic as Chambers about the potential for moving ahead so aggressively on IT investments.

But harsh economic conditions may make possible some IT actions that were off the table in more flush times. For instance, John McLatchey, an enterprise architecture planner at a health care company that he asked not be identified, said the thinking in his group is to try to push through changes that may have been politically difficult before, such as getting rid of legacy systems that are expensive to maintain. "Let's use this as an opportunity," he said, describing the internal view.

Miguel Gascon, CIO at Panama-based Global Bank Corp., is taking a much more basic step -- one that goes to the heart of the new financial cautiousness. Gascon said he plans to make invoice verification a higher priority in his department, in order to make sure that IT vendors' bills are correct and meet the terms of their contracts.

This version of the story originally appeared in Computerworld's print edition.

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Copyright © 2008 IDG Communications, Inc.

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