The Slowdown: Learnings for CIOs

With IT purchase getting limited, projects getting deferred, and IT budgets likely to be slashed thanks to the slowdown, you need to be prepared for the worst. Read on...

Monday, December 01, 2008

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Given all the noise about the US slowdown and how it's impacting the Indian economy, it would be only natural to expect Indian organizations to slash their IT budgets, freeze work on all IT projects, and limit all IT purchases. But to our surprise, our interactions with the CIOs of some leading Indian enterprises didn't quite give us as adverse results as we were thinking them to be. Yes, Indian CIOs have become conscious about the slowdown, but they're not going overboard with the same. They're continuing with their critical IT projects, and have deferred the less critical ones. All unnecessary IT purchase has been limited, but IT budgets haven't really been slashed. While it's good to follow this level of cautious optimisim, it may not be sufficient in the current situation. It might limit more equipment from getting added to the IT infrastructure, but it doesn't address the woes of managing the same.

Therefore, CIOs must use the current slowdown as an opportunity to cut down all the flab, slow down on new IT projects, and focus on getting more out of their existing investments. This is the right time to improve efficiencies and get more out of your existing investments. One of the things to focus on is automate as many manual processes as possible. In fact, by optimizing your current IT infrastructure, you're also improving time the economy pulls itself back into shape, while your IT infrastructure would be ready to move to the next level.

That's why our IT strategy story this time acts as a guide for CIOs to survive the slowdown. We start by assessing the overall impact of the slowdown, and then drill into specific bits on what kinds of technologies and processes to adopt for combating the slowdown. Some of the results we got were pretty interesting.

Impact of Slowdown on IT
When we quizzed IT decision makers across India about the impact of slowdown on their companies, only 6% claimed there has been no impact at all. It's no secret that slowdown is starting to impact Indian IT companies. So far the impact hasn't been much serious and we really hope the situation doesn't get any further worse. To find out how much it impacts IT departments and IT projects, we asked CIOs about state of their current IT projects. More than half of them accepted that a few IT projects have been deferred and almost a similar number claimed that their further IT purchase has been limited.

In our survey, we asked CIOs about the measures they have taken to survive the slowdown. A major chunk said that they are currently renegotiating their contracts with vendors and looking for innovative ways to cut costs. Re-negotiating existing contacts isn't a bad idea, as vendors under the impact of slowdown, may offer you better deals than competition. Plus there can be instances where you can get some of the clauses to be reviewed to get you better prices. Similarly you can also review other costly projects. Most CIOs claimed they are looking to utilize their current resources to a maximum level. This just doesn't apply to IT but also to IT personnel, and lead to higher employee utilization levels.

Another issue with cost cutting is that it mostly leaves your employees as well as end users unhappy. At times this might be because the change you made might cause a few difficulties which you might not be aware of. Our survey found that it is better to take feedback from end users and employees itself of how to better utilize your current resources. Sometimes, the best of all ideas come from end users only.

Where to invest in 2009?
With tight budgets, IT decision makers are being more and more careful before they finally invest in any particular technology. When we asked them about predicting the next year's IT budgets, only 16 percent of them expect it to increase. When we asked how much the current slowdown is likely to affect their IT budgets, half of them feared that their IT budgets are likely to get slashed in future.

As far as investments in new tech are concerned, pretty much like last year, IT decision makers remain keen on Virtualization and communication solutions such as VoIP, Video and Web Conferencing. Also WAN optimization and Open Source solutions look to be big beneficiaries in 2009. Another interesting observation thing we found is that IT decision makers are finally taking Cloud Computing seriously and few plan to invest in it, in the coming year. Other areas where CIOs are likely to shell out money include Security, Business Intelligence, ERP and storage solutions.

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