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Research offers hope for IT recovery

Bill Goodwin

IT professionals across Europe are optimistic that their IT budgets will recover in 2010 as the global economy begins to pick up.

A survey of 300 IT professionals in the UK, France and Germany, shows that 15% believe their IT budgets will recover by the summer, and 45% by the end of 2010.

"There is an increase in optimism," said Cherry Taylor, managing director of Dynamic Markets, which conducted the research. "Most people anticipate an increase in budget in 2010."

IT fights back

IT departments are fighting back by using IT more efficiently, automating processes, and carefully managing their IT assets, the research concludes.

But the study, commissioned by Numura Software, shows that IT managers are concerned that deep cut-backs over the past two years may have permanently damaged the status of IT in the organisation.

One third said that funding cut-backs had left the IT team demotivated and 23% said that if IT projects went wrong because of underinvestment, it is still the head of IT who picks up the blame.

About 63% of IT decision-makers said they were concerned that the business might have become so used to reduced spending on IT that budgets may continue to suffer for years to come. And 20% said their IT departments had almost given up asking the board for new funds.

As the economy improves IT organisations should fight back by helping the business work more efficiently, said Steve Mann, senior analyst at Ovum, commenting on the findings.

"IT organisations need to say, 'Hold back on the cost cutting'. Rather than stop doing, we should work out how to do things more efficiently and save money that way," he said.

They should manage their internal IT assets and work with their outsourcing partners to ensure that they are not being overcharged, or paying for software licences they no longer use, he said.

"You have people who have left the organisation but you are still paying your outsourcing partner for them. When you change from XP to Windows 7, its easy to be charge for both licenses. From simple common sense, why don't IT departments ask why they have twice as many PCs as employees, " he said.

The survey shows that IT departments have been deeply affected by the recession over the past two years.


Sign up to download the full research report: The Re-birth of the IT budget ?

Research firm, Dynamic Markets interviewed 300 IT decision-makers in the UK, France and Germany, on the state of their IT budgets, in a survey commissioned by Nomura Software.

The survey found that IT professionals are optimistic about their budgets recovering, but fear that cutbacks may have caused lasting damage to the standing of IT in their organisation.

The research also looks into IT professionals perception of help-desk solutions and finds that many are frustrated with their suppliers, and the unexpected costs that emerge after they buy products.

Key findings include:

(On IT budgets)

  • IT professionals are optimistic about recovery
  • Cutbacks have damaged the status of IT in the organisation
  • IT departments will need to fight to restore their credibilty
  • Innovation has been hit by cutbacks
  • Projects are taking longer to sign-off.

(On service desk management)

  • Software maintenance is IT departments' biggest expense
  • Companies can save money by managing their assets more effectively
  • IT managers report problems and unexpected costs with service desk software
  • IT managers are frustrated with service desk solution suppliers.

Click here to download executive summary >>

Click here to download full report >>


Over 80% of European companies questioned said that their IT funding had been hit, with 34% reporting budgets cut and 18% budgets freezes.

IT departments in the UK, which was one of the last countries to pull out of the recession, have been harder hit than IT departments in France and Germany, the survey reveals.

About 27% of companies said that cutbacks meant it had taken longer to sign-off projects, and 25% said that more senior people were now involved in signing-off projects.

Innovation has also been hit with some 40% saying that projects designed to encourage innovation had been refused funding.

Damage to the profile of IT

Cutbacks in the IT department can damage the perception of IT in an organisation.

But David Harker, European service desk manager at the mobile medical products manufacturer, Sunrise Medical, said its IT department had transformed its relationship with the rest of the business, by helping the company work more efficiently

The move, by Sunrise Medical's European technical services division, which provides IT services in Europe, has had a dramatic impact on the perception of the IT department in the rest of the business, said Harker.

"Our standing in the organisation was at rock bottom, but we are now really engaging with the business. We are helping the company tackle efficiencies. Our standing is such that the business is now coming to us with projects."

The IT operation in Europe has deliberately taken a different approach to the firm's IT operations in North America.

The US culture is to buy the best software, with as many useful features and bells and whistles as possible, he said.

But European operation has differentiated itself by focusing on how to do the job with lower cost, or packaged software.

"We have been able to negotiate with suppliers and negotiate a deals. In North America they will spend money at a project to get the best software. But we will consider out-of-the-box packages," he said.

"In the past we have had all sorts of problems raising money for a project. But now the business is coming to us with problems and saying, 'Can you do something about it?'"


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