IT project cutbacks no cure for downturn

Shelving IT projects and cutting headcount to impress City analysts and shareholders do not improve the long-term health of the...

Shelving IT projects and cutting headcount to impress City analysts and shareholders do not improve the long-term health of the business, according to a report published by PricewaterhouseCoopers (PwC).

However, these are often the first steps UK financial chiefs take when times are hard. "Because of the dotcom bust there is a degree of scepticism about the benefits of IT and companies need to have a strong business case before the City will support them," said Jonathan Tate, a partner at PwC.

Tate said that two-thirds of UK companies polled for the research have not started any major IT projects in the past year despite the fact that implementing an e-procurement system is "an easy way to cut costs as opposed to reducing headcount," for example.

"Research shows that most companies that fail do so coming out of a recession because they have not invested in things that will drive long-term prosperity. Too much cost cutting can be fatal," he added.

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