Slash IT spending now, analyst warns

26 Feb 2008

Whether it is recession hysteria or sound advice, noted analyst Gartner has warned now is the time for CIOs to implement their emergency plans to cut IT spending.

Analysts at the firm believe economic factors in the US have deteriorated to a point where action is required on the IT spending front.

It has urged businesses in countries where GDP growth is predicted to be less than 2pc this year to start their IT cost-cutting plans now.

“Last October we published research recommending that organisations should prepare two IT budgets for 2008, the first reflecting guidance already provided by senior decision-makers and a second ‘backup’ budget assuming the need to cut costs in response to the arrival of a business slowdown,” said Ken McGee, vice-president and Gartner fellow.

“Since that time, the factors we based the research on, such as GDP growth projections and expert predictions for the likelihood of a recession, have worsened to a degree that convinces us it is now time for clients to prepare for cutting IT costs.”

The analyst firm said history proves that many organisations wait months following the start of a recession to be informed that a recession has in fact begun. The time is now at hand to prepare a cost-cutting team, rather than wait for official notification.

It recommends firms should choose their best and brightest IT people for the cost-cutting team.

To encourage speedy action, Gartner urges that this A-team looks at all IT projects in the context of the time the decision was made on them – avoiding finger pointing – and simply identifies the target for cost cutting and moves on.

To ensure effectiveness, it says an experienced accountant, preferably external, should be appointed to audit the process and ensure any savings identified not only leave the IT budget but leave the expense pool of the entire organisation.

Reporting should occur on a weekly basis, showing savings achieved, and this must be kept up as tough economic times prevail.

As the cost cutting will inevitably result in layoffs and redundancies, as well as service level and maintenance contracts, Gartner urges the IT cost-cutting team to work closely with the firms’ legal team to offset potential liability.

By John Kennedy