CIOs are being urged to not only have one IT budget, but also have a second ‘backup’ budget that allows them to cut costs in response to a global economic slowdown, a cautious Gartner has advised.
Gartner says that due to the recent turmoil in credit markets around the world and continued uncertainty surrounding the future economic climate, businesses need to plan for all uncertainties.
It said CIOs should create two separate IT budgets. The first one should reflect guidance of senior decision makers, but also have a second ‘backup’ budget that assumes the need to cut costs fast.
“Although the financial outlook for 2008 remains far from certain, waiting for a clear economic trend to appear prior to taking action is not a prudent option,” said Ken McGee, vice-president and Gartner fellow.
“There is already sufficient concern about the possibility of a business slowdown for next year from enough credible and independent sources to suggest that preparing a backup cost-cutting IT budget now is just plain good management.”
According to Gartner, CIOs need to have a ‘recession budget’ and business plan ready for immediate implementation long before being asked to reduce costs.
To be meaningful, Gartner recommends that such plans should target a decrease in IT spending of at least 10pc below the highest annualised IT spending run rate levels attained in 2007.
CIOs and IT managers who play their part in preserving as much enterprise profitability as possible will benefit the wider organisation.
“Creating a responsible alternative recession IT budget now will demonstrate the type of innovative and forward-thinking that senior executives expect to see from their staff,” said McGee. “It will also show the kind of flexibility and agility needed to respond to fast-changing economic and business conditions.”
McGee said that rather than viewing the possibility of a significant business slowdown or recession with trepidation, organisations should use it as an opportunity to create a solution that will enable the enterprise to react with speed and certainty if the worst economic concerns come to pass.
By John Kennedy