CIOs cut costs with no plan to innovate out of recession

Many CIOs in France, Germany and UK are cutting IT costs without a long-term view of how to help the business innovate...

Many CIOs in France, Germany and UK are cutting IT costs without a long-term view of how to help the business innovate out of the recession.

IT directors and CIOs unable to help organisations see their way through the recession using IT have a poor link with the business, according to a survey of 300 IT departments conducted by Loudhouse for software management company BMC.

The survey found that over 40% of companies have not yet begun to deal with the impact of the recession. CIOs in such businesses were much less likely to streamline their IT operations, the study found.

They also have fundamentally lower expectations about the IT department's ability to help other parts of the business to drive down costs.

The survey found a quarter of businesses were using IT to help them innovate through the recession. Of these, 41% focused on IT automation as a route to cost cutting. These were more likely to re-invest IT savings to further enhance business efficiency.

"The lesson we can draw here is that companies cannot simply save their way back to recovery," said Alexander Grous, a researcher at the Centre for Economic Performance (CEP) at the London School of Economics, who has studied the link between IT investment and business performance extensively. "Innovation deficits are extremely hard to redress. Organisations that recover best are those investing in areas of the business that can deliver long-term returns, such as IT."

Chris Rixon, director of field marketing at BMC, said IT departments that focus on cost cutting goals have the weakest link with the business: "The IT industry needs to educate companies about how technology can drive out cost," he said.

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