IT warned of harsher economic times ahead

The troubled housing market, the credit crunch, the continuing energy crisis, and the declining rate of CEO confidence all signal more difficult times ahead, says Gartner

IT leaders need to prepare for changed business priorities as the economic climate is going to get harsher, the head of Gartner's global research, Peter Sondergaard, has warned.

"We see the potential for troubled times ahead," Sondergaard told delegates at Gartner's recent symposium held in Cannes, France.

The troubled housing market, the credit crunch, the continuing energy crisis "and, last but not least, the declining rate of CEO confidence" all signalled more difficult times ahead, he said.

This would change the priorities and strategies of businesses, he warned in his keynote address. "Your bosses will move from growth to execution. You must be prepared for changing business objectives."

Sondergaard questioned the belief among chief information officers that IT budgets would continue to grow. A Gartner recent survey showed 59% of CIOs expected to increase their IT budgets in 2008. "But are you sure this is the case three months from now?" he asked."

CIOs should prepare two budgets for 2008, he urged, echoing remarks he made last month at Gartner's ITXpo, held in Orlando, Florida.

The first should assume growth similar to that seen over the past six years, while the second should "assume the need to cut costs with the arrival of a recession," Sondergaard said.

CIOs and other business executives will try to deal with the more difficult economic climate with "new efficiencies, new innovations and new ideas to sustain growth", he said. "IT will be at the core of those responses."

This situation "confronts you with heavy responsibilities", Sondergaard warned.

The Gartner research chief said 2007 had been a "milestone year" for IT, which was set to become a £1.5 trillion (NZ$4.04 trillion) market. But a tightening economy would "change the growth rate of the IT industry in 2008," he cautioned.

The past year had seen other key developments, such as the huge growth of consumer-driven Web 2.0 technologies. In the US this year, MySpace had accounted for 6% of all internet visits – "33% more than Google", Sondergaard said. It had also been "the year of green", which saw a growing understanding of the importance of power consumption issues among IT users.

Increased interest in virtualisation and the rise of software as a service had also marked the year out, he added. "Innovations such as these are increasingly visible to business leaders and your non-IT colleagues."

IT leaders would find their colleagues wondering why these new developments were in the marketplace but not in their own enterprise, he added.

Sondergaard listed a series of "imperatives" for IT organisations: attracting and retaining customers; maximising performance and profitability; improving critical business processes; boosting the effectiveness of the workforce, and managing risk and compliance.

"May the computing force be with you," he concluded.

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