Recession only temporary, Gartner VP reminds conference

Don't lose sight of long-term goals amid immediate cost-cutting, researcher says

While the fallout from the worldwide recession is affecting IT, it’s not all doom and gloom, says Gartner research vice president Andy Rowsell-Jones.

Speaking at an Iconz client and partner seminar in Auckland late last month, Rowsell-Jones, who is vice president and research director in Gartner’s CIO Research Group based in Melbourne, noted that some industries are continuing to invest strongly in IT.

“In industries that need to compete on price – logistics, casinos, pension administration, for example – you’re seeing investment is being made in IT in order to drive down overall costs,” he told the audience.

“IT still has a role to play in making business more efficient and effective,” he says.

During his presentation, Rowsell-Jones noted 10 trends that Gartner has identified as driving IT in today’s economic environment and which the research firm believes will continue to do so over the next few years.

They are: virtualisation; cloud computing; business process outsourcing; process analysis using business process management suites (BPMS); green IT; low-cost laptops/netbooks; the decline of the desk phone; the end of unlimited mobile data plans; growth in internet video traffic from physical sensors; along with growth in videoconferencing.

Virtualisation is being widely-implemented, and while cloud computing is more bleeding-edge, organisations are utilising it for certain applications, Rowsell-Jones noted.

“Companies are using cloud computing for Business Intelligence and other applications that aren’t time-critical, such as staff rostering.”

Apps that deliver real-time data and require higher security, such as airline operations, are remaining on-premise, he says.

The business process outsourcing (BPO) field will see some consolidation in the immediate future, he noted.

“BPO is a good response to current economic conditions, but remember, some of your BPO providers won’t be here in a year’s time.”

The use of BPMS (business process management suites) will result in some processes being taken away from IT and into the organisation, with non-IT users having more of a say in the running of processes, “on the back of tightly-defined standards”.

Green IT “hasn’t gone away”, despite being superseded by more immediate concerns as the economy has stumbled.

“Many vendors are still using ‘green’ as a major selling point,” Rowsell-Jones noted.

Implementing green initiatives such as power-reduction, “reduces business costs, so is a good way to achieve cost-cutting and agility-enhancing goals”.

Gartner predicts that in 2012, 30% of laptops will cost less than US$300, with netbooks providing most of those sales.

By then, many users will be bringing their own devices into the workplace, which will raise security and access issues.

Another Gartner prediction is that by 2013, 40% of employees won’t have deskphones, but will conduct all voice communications via their cellphone.

Another cellphone-related forecast is that carriers around the world will abandon unlimited mobile data plans, which were designed to get low-use markets up and going.

Another prediction is that a huge slice of the growth in internet traffic will come with surveillance from physical sensors. He cited the linking of fridges to IP networks as an example.

Last among the 10 technology pointers to the future was a more familiar one, videoconferencing.

Rowsell-Jones pointed to applications such as Cisco Systems’ TelePresence and cited another Gartner prediction: that in the years up to 2012, 2.1 million airline seats will be given up as a result of organisations instructing staff to conduct business by a videoconference instead of flying.

He also urged CIOs and other IT professionals to, “step away from the immediate and look at the important”, which is to say, don’t focus solely on their organisations’ short-term financial survival.

He encouraged those in the audience to ask themselves, “What is IT for? Why do we invest in it? What is the business value of it?”

One answer is, “to allow businesses to run more efficiently than before”.

As an example, he cited a finding that surprised many in the audience – namely, that the industry that best uses CRM isn’t banking or airlines, but casinos.

“The casinos’ understanding of retail behaviour is better than any other industry,” he stated.

As well, prioritising IT projects is important.

“We’re seeing a shift in the way projects are being allocated – projects that are aimed at driving up revenue are being shelved in favour of ones that achieve efficiency.

“If you’re putting IT resources into flights of fancy, such as chasing new growth when the company needs costs to be reduced, you’re not doing your job. And just because a project has started doesn’t mean you can’t cancel it.”

Where and when to cut back isn’t always so clear, however. One question from an audience member inquired about Disaster Recovery and Rowsell-Jones replied: “It’s very tempting to cut back on DR in recessionary times.

“It’s tempting to over-supply during good times, with all systems mirrored etc, but in a recession it’s good to take a look at each system and ask, ‘would it matter if it was down for a while’?”

He offered more tips for IT managers struggling with the need to reduce costs.

Understanding your cost structure and the potential for savings is vital, he says.

“Any IT organisation spends approximately 37% of its budget on people, a fifth on hardware, a fifth on software and a fifth on outsourcing etc.”

Rowsell-Jones cited a myriad of ways costs in IT departments can be reduced, from avoiding “grade creep” – having someone senior do a job that could be done by someone more junior, at lesser cost – to avoiding project scope creep, to keeping an eye on mobile phone roaming charges incurred by staff travelling overseas. As well, a department can initiate chargeback systems, where users are given a realistic view of the cost of when they use, or consider using specific technologies such as Voice over Internet Protocol, virtualisation, Unified Communications and open-source software.

In his presentation he went beyond short-term needs such as cutting costs and looked at the broad future of IT.

“The world’s population is aging and urbanising, and the people who will make money in the future are those who cater to that trend.”

The consumerisation of IT, now being seen in devices such as the iPhone, means “we may have to pay more attention to user demands, for example, for nice user interfaces”.

Above all, Rowsell-Jones emphasised, the audience must not lose sight of the fact that this recession is only temporary and the economic situation will be better in 12 to 18 months.

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