The negative drumbeat in the financial media has been increasing in
intensity over the last several quarters. The bursting of the
housing market bubble and the subsequent seizing up of the credit
markets in the US and across the globe have been the lead stories.
The failure of Bear Sterns and the Federal Reserve and Treasury
Departments brokering of shotgun mergers seems to have marked a
turn away from the abyss of a total collapse of the financial
markets.
Yet the impact of the housing and financial market crisis seems to
be spreading to other sectors of the US economy and is likely to
begin affecting a wide range of businesses. In a recent Fuqua
School of Management Survey of CFOs, 54% of CFOs said that the US
is now in recession with another 24% of the remaining CFOs
expecting a recession this year. Furthermore, this same group of
CFOs expected capital spending to slow to a 3.3% rise with
inflation of nearly 3% eating up this increase, with recovery not
expected until late 2009.
For the next 12 to 18 months, we are likely to see a tightening of
capital and expense budgets with a significant impact on IT
projects and staffing. This paper is intended to explore some of
the implications of the emerging economic downturn and to lay out
prudent IT management strategies for proactively navigating through
the downturn.
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