IT directors were urged this week to prepare for cuts in
their IT budgets as concerns grow that the UK will experience an
economic slowdown this year.
The downturn in the US could affect the UK, causing companies to
rethink spending on IT projects and threatening 2008 IT budgets,
businesses fear.
Analyst firm Gartner advised IT directors to ensure they have a
"recession budget" and prepare for cuts in IT budgets of 10%.
Angel Dobardziev, practice leader for IT services at Ovum
Research, said, "The challenge for IT managers in a recession is
deciding what is essential spend and what is not. If a downturn
happens, competition will rise, and businesses will look to IT for
innovation."
Ray Titcombe, chairman of the Strategic Supplier Relationships
Group, said IT directors could make the most of tight IT budgets by
focusing on projects that deliver quick business wins.
Graham Royle, IS manager at steel producer
Corus International, said, "One of IT's key tasks is to ensure
that we have the flexibility to support redeployments of resource,
while ensuring that management control and a common customer
experience are maintained."
A slowdown will put pressure on firms to consider outsourcing IT
services, said David Roberts, chairman of the
Corporate IT Forum. "Pricing pressure will force IT directors
to look for cheaper offshore IT services," he said.
However, Maggie Kneller, chairman of the
IT Service Management Forum, warned IT directors to think
carefully before signing
outsourcing deals. "Outsourcing can help [during a downturn] if
the IT service is already optimised in terms of service cost, but
it is worth looking the design of the IT service first to remove
any obvious inefficiency."
Ronan Miles, chairman of the UK
Oracle User Group, said IT directors may also be able to get
low-cost finance deals from suppliers if trading conditions become
difficult.
Carrie Hartnell, programme manager at IT suppliers group
Intellect, said CIOs should consider buying software as a
service to reduce costs. "They should look to buy services or
upgrades that will provide greater productivity without the cost of
a new system."
But IT directors should be wary of pressure from suppliers as
they struggle to reach sales targets, said Andrew Watson, CIO at
British Transport Police. "Care needs to be taken on both sides
that existing relationships are not compromised in the longer term
by suppliers attempting to push sales simply to maintain turnover,"
he said.
Jeff Brooks, chairman of the Recruitment and Employment
Confederation's IT sector group, advised hiring software developers
this year if there is a downturn, as skills will be scarce and
expensive coming out of a recession. "Business will be making a
saving on tomorrow's IT salaries by recruiting today," he said.