IT managers should now prepare tocut IT costsin preparation for an
impending recession, says analyst Gartner.
IT organisations should not wait for an official declaration
that a recession has begun before undertaking IT cost-cutting
efforts, Gartner said. It said economic factors in the US have
deteriorated to the point where action is required and the firm is
advising US businesses to prepare for cutting IT costs.
Organisations based in other countries, where gross domestic
product (GDP) growth is projected to grow less than 2% in 2008, are
also advised to prepare for IT cost-cutting now.
"Last October, we published
research recommending that organisations should prepare two IT
budgets for 2008, the first reflecting guidance already
provided by senior decision makers, and a second 'backup' budget
assuming the need to cut costs in response to the arrival of a
business slowdown," said Ken McGee, an analyst at Gartner.
"Since that time the factors we based the research on - such as
GDP growth projections and expert predictions for the likelihood of
a recession - have worsened to a degree that convinces us it is now
time for clients to prepare for cutting IT costs," he said.
Gartner believes that as concerns increase for the near-term
health of some of the world's largest economies, those responsible
for IT budgets can expect to receive mandates from senior
executives to cut IT costs as part of an enterprise-wide
cost-cutting programme.
It recommends that organisations begin establishing ground rules
for complying with such a cost-cutting mandate by following a
six-step plan:
Step 1 - Do not wait for the cost-cutting mandate from
management
History proves that many organisations wait many months after a
start of a recession to be informed that the recession has begun.
Gartner advocates preparing a cost-cutting team now rather than
waiting for official notification.
Step 2 - Choose the best and brightest IT people for the
team
Gartner recommends that top performers are assigned to lead IT
cost-cutting programmes, and that all other duties from their
day-to-day tasks are removed for the duration of the cost-cutting
assignment. Year-end financial bonuses should be based exclusively
on the amount of money the team saves in 2008.
Step 3 - Do not allow finger-pointing or second
guessing
Cost-cutting teams need to assume that everything that was done
in the past was the right thing to do at that time, and not dwell
on earlier decisions. They should identify the target for
cost-cutting, perform the appropriate action and move on.
Step 4 - Enlist an internal auditor as
scorekeeper
If cost-cutting is to be accurately reflected in the IT and
wider enterprise budget, then the appointment of a relatively
senior accountant or auditor is crucial. The auditor's list of
savings will also provide an official record of the team's
performance.
Step 5 - Report results on a weekly basis
Senior management should not be kept guessing about the progress
made on reducing costs. During tough economic times, the IT
cost-cutting team should provide a weekly report that depicts
savings achieved since the last weekly report, along with aggregate
year-to-date savings.
Step 6 - Identify a liaison from the legal
department
IT cost-cutting teams will almost certainly encounter legal
issues pertaining to contractual obligations such as maintenance
contracts and penalty clauses. Quick access to legal guidance will
be invaluable so that all team members can quickly arrive at
cost-cutting solutions without increasing the liability of the
company.
Source: Gartner