Investing in IT during Recession
November 13, 2008 by Raj Sheelvant
Due to financial meltdown we are going to experience a global recession and companies will look to IT to lower their costs in the coming months. CIOs need to think about the downturn on two fronts, according to the SearchCIO article Forrester: How IT rides out the recession
First, IT leaders should focus on projects that help their companies weather the downturn.
Second, CIOs need to ensure that IT emerges from this downturn as an integral, not marginalized, player in their companies’ business strategy.
The article states that in hard times, smaller projects with faster payback periods should dominate. As CIOs do their part to reduce costs, they should look for ways to support projects that are linked with their business’s strategy to ride out the recession.
I think that it is critical for the CIOs to continue to support projects that help organizations achieve its business strategy. The usual knee jerk reaction in this extremely pessimistic external environment is to cancel or postpone all the IT projects. But CIOs needs to identify those projects that can help their company create and sustain differentiation, build on their core competencies and continue to invest in those types of projects. That mind set will enable the organization to come out stronger from a downturn.
Article states that Forrester believe that this recession will not be a repeat of the 2001 recession for IT, when technology was the bubble and the IT profession paid dearly when it burst. One explanation for the relative immunity enjoyed by IT this time around, if it holds up, is that a lot more businesses “get technology” than in 2001. A majority of business leaders now view technology as a core component of their products and services (82%) and/or as a differentiator (72%) in addition to a vehicle for reducing the cost of business operations (66%). The article further states that as CIOs cull their IT portfolio going forward, linkage to business strategy is paramount.
It’s heartening to see that many business executives see the role IT can play in creating and sustaining ‘economic moat’.
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