Enabling business cost reduction will be the priority for IT departments in 2010. Some 46pc of CIOs plan to reduce headcount as part of an IT cost-reduction programme.
Enabling business cost reduction is the top priority for IT departments through next year, according to the Deloitte CIO survey 2009.
Irish CIOs, who have already been successful in reducing costs in their organisations, are now faced with the challenge of enabling further business cost reduction against a backdrop of falling IT budgets.
In fact, the survey of Irish CIOs found that nearly 60pc of respondents expect their IT budgets to be cut by up to 20pc in 2010, while a smaller proportion (6pc) expect even bigger cuts. That said, a fortunate 22pc of respondents are anticipating an increase in their budget by anything up to 30pc.
IT cost reduction remains a top priority for IT departments, second only to business cost reduction. This is somewhat surprising given the attention that has been afforded to IT cost reduction over the last 18 months.
However, with more than 80pc of respondents in the middle of or planning an IT cost-reduction programme, it’s clear this remains high on CIOs’ agendas. It is interesting to note that only 17pc of cost-reduction targets were set by the CIO. With staff costs a significant proportion of IT budgets, it is not surprising that 46pc plan to reduce permanent headcount as a result of the programme.
“In the last year, CIOs in Irish organisations have brought about significant cost reductions in challenging circumstances,” said Harry Goddard, partner, consulting, Deloitte.
“The challenge now is to achieve incremental and sustainable IT cost savings beyond what they have achieved in 2009, while simultaneously enabling cost reductions in the wider business. A radically different approach to IT will be required if these competing goals are to be achieved.
“For that reason we would encourage CIOs to look at revising their IT strategies and improving IT/business alignment – these really are key enablers of sustainable business and IT cost reduction.”
On the subject of IT/business alignment, the survey highlights that nearly half of respondents rate this as either fair or poor within their organisation. Only a quarter of participants believe that the business views them as a strategic partner.
In addition, the survey also highlighted the attention that needs to be focused on information management. Despite 89pc of respondents agreeing that information is seen as a strategic organisational asset, only one-third of participants have an information management strategy.
“Based on these findings, it’s clear that CIOs need to focus on being viewed as less of a cost centre and more of a business partner. There are two initiatives that can facilitate this. Firstly, by implementing a comprehensive information management project CIOs can facilitate the easier access and management of both timely and relevant information, thereby adding strategic value to the business.
“Secondly, we would encourage CIOs to consider an Enterprise Architecture (EA) approach. EA is perhaps the only proven tool to reduce IT costs, while simultaneously supporting the business in its cost reduction and business change initiatives. It’s unfortunate that despite a good awareness of the benefits of EA, nearly two-thirds of organisations are not planning to adopt this approach in the next 18 months.
“Both of these initiatives are potentially low-capital projects and can drive business cost reduction. With the right governance in place, they can also help in further aligning the IT function with the overall business – which is a major priority for Irish CIOs today,” Goddard advised.
By John Kennedy
Photo: Irish CIOs now face enabling further business cost reduction against a backdrop of falling IT budgets.