Monday, October 13, 2008

Analyst and research company Gartner revised its IT industry projection figures and - as reported this morning by ZDNet and released by Gartner themselves - presented them during a symposium keynote at the company's big annual IT conference, which opened this morning. In a nutshell, Gartner analyst Peter Sondergard says they still expect growth, and that even in the very worst case, IT spending next year will fall about 2.5 percent. From ZDNET:

  • Gartner had expected budgets to grow 3.3 percent in 2009.
  • Now the most likely case is IT budget growth of 2.3 percent to 0 percent.
  • The worst case is that IT budgets will be down 2.5 percent.

Forrester Research also recently cut it's projections for 2009 IT spending, but still ended up with figures in positive growth territory. So, if the analysts are to be believed, the business sector feeding products and services to IT should still see some growth.

The question is, where will that growth happen? My guess would be that one good place to be doing business is anywhere products or services are commoditized and can be outsourced, as well as in key technology areas like security and high availability.

Having successfully managed an IT organization at a "dot-com" company through a few years of painful economic times early in this decade, I can say from experience that at the time we had to cut overall IT spending dramatically to allow the company to survive. We went quickly from buying lots of new computers and software and building out data centers to buying practically nothing new for two full years. We renegotiated stacks of contracts with vendors and major software suppliers, consolidated services, convinced vendors to charge us less, and in the end prioritized every single project and said "no" a lot.

As a result, we cut our multi-million dollar budget almost in half and - in combination with other business changes - put ourselves in a position where we were just able to weather the storm financially. It was painful and a bit scary at times, and we had to deal with the side effects of substantial change. We had to get very creative in leveraging what we already had and nothing more, but in the end we all learned a difficult yet necessary lesson: You don't have to spend, spend spend to survive, or even to thrive in some cases.

In fact, what we needed to do was just the opposite of the "spend" approach. We would still spend where it made the most sense - but our decision-making process changed dramatically. You have to shift where the money goes to maximize your dollar's impact in the specific environment, adapt to the rapid changes in the marketplace, and work with your business partners and vendors to make it through to the other side. Smart vendors and good partners know that doing whatever it takes to survive a storm together means a better relationship when we all come out of the clouds.

Gartner has a list of ten things they say IT organizations need to consider when faced with tough economic times. They are not easy or happy things. But I think they're spot-on. I've had to do all of these things when times were toughest.

  • Reduce headcount or freeze hiring
  • Renegotiate with technology and service providers
  • Curtail data center expansion, virtualize assets and lease them back
  • Consolidate systems
  • Outsource commodity
  • Offshore outsource
  • Investment shutdown
  • Prioritize projects
  • Mothball businesses and projects
  • Change leadership and restructure IT teams

What's your IT plan? Are your budgets shrinking, or staying about the same? How would you prepare for tight times ahead?

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Monday, October 13, 2008 7:30:20 AM (Pacific Standard Time, UTC-08:00)
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