2009: An annus horribilis for IT management

Budget cuts much worse than forecast in late 2008/09

2009 has turned out to be a far worse year for CIOs and IT managers than anyone expected, according to IDC.

Speaking to Computerworld, IDC analyst Chris Morris said many sectors of the local and global economy saw much deeper IT budget cuts than anticipated in the year.

“Nobody expected 2009 to be as bad it ended up and the rapid deterioration in the worldwide economic climate impacted all of businesses’ plans for 2009. The forecast made even at the end of 2008 and beginning of 2009 proved to be very inaccurate,” he said.

“We have gone through a period of slow or negative growth in key markets around the world so plans CIOs made got squashed. CIOs have been asked to do more with less for a long time but it got suddenly worse.”

At the same time, Morris said, IT managers and CIOs had to manage the needs of business units demanding improved service levels and/or new functionality or applications to help adapt their business models to deal with the shrinking economy.

“Then you have the CFO, naturally, in a period like this, much more involved in a day to day decision making for all IT projects,” he said. “They’re forcing CIOs to save money or find different ways of funding the new stuff and keeping the lights on.”

Morris said that CFO or financial controller involvement in IT decision making was now “part of the new normal” and a realty that IT management would have to come to terms with.

“CFOs will continue to play an active role – ideally as partner to the CIO as so many of the changes that will have to happen in an organisation over the next three years plus will be driven from the top down,” he said. “CIOs are not often represented at the board level, so with a CFO partnership in place, faster change in the way services are delivered will be enabled.”

However, building a relationship with the CFO and taking advantage of it had a number of challenges that CIOs and IT managers needed to be aware of, Morris said.

“CFOs typically don’t understand technology and the traditional breed of CIO has come up through the technology ranks and isn’t always across all the business issues, so communication at that level can be challenging,” he said. “But if you look at CIOs these days, many have very strong management capability and have been cycled through other areas of the business. Some may be able to cope very well, so situation normal for them; others will find it pretty hard.”

Looking at the financial outlook for the next 12 months, Morris said a rebound in IT budgets was expected in the second half of 2010, at which time projects which had been suspended – typically hardware and software refreshes and upgrades, and innovation investments – would recommence.

However, It was also likely that CIOs and IT managers would continue to be capital constrained so alternate delivery models which offered cost savings would also be popular, Morris said.

“In effect this slowdown has accelerated the take up of cloud based technologies and more different ways of achieving goals will be considered by the CFO – cloud based delivery, the expansion of outsourcing they have in place for application management, infrastructure management network management, or whether they start to source product and services from the cloud,” he said. “All of that is on the table and being actively considered.”

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