Preserve the future of IT as economy tightens

Prudent IT managers are anticipating being asked to cut costs, so what are the lessons of the last economic slowdown.

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The economic slump has generated pain all around. If it hasn't kicked in for your organisation, at some point it will. As we swing into the second half of the year, CIOs are scanning for opportunities to prune expenses.

For those who anticipate being asked to cut their IT budgets between now and the end of the year, it's a good time to reflect on our past behaviour.

The last time the economy soured, CIOs responded as if the sky were falling. In the ensuing panic, many CIOs cut too much of the wrong things. This time, you need to plan ahead to preserve your organisation's ability to grow again when needed.

Then: The Destruction of IT Competency

Think back to the dotcom boom. Remember the Y2K spending hangovers, bloated organisations and datacentres everywhere crowded with redundant equipment? IT shops amassed unused software and stacks of yet-to-be-read service and maintenance contracts. Pioneering infrastructure outsourcing deals designed to "save money" were launched with nary a baseline cost analysis. Travel was unconstrained, and everyone's stock was up.

When the bubble burst, IT organisations were sitting ducks. Spending was justifiably slashed-but without contingencies and little strategic thought about what would happen once growth began again.

Vendors went out of business, venture capitalists stopped funding new ideas and IT R&D teams were disbanded-putting a damper on innovation. Meanwhile, service levels often plunged and enterprise know-how was pushed out the door without warning, as Just-Do-It outsourcing accelerated.

Finally, as a nasty side effect, IT lost its charm as a career for young people just as the average age in many organisations began to climb. In one large defence industry IT organisation I am familiar with, the average of IT employees is older than 50.

In a large manufacturing company, only the senior IT staffers are employees; instead, IT careers with the company must be launched and developed inside supplier organisations.

Preserve the Future of IT

In this next wave of cutbacks, we can do better-now that we are armed with experience and hindsight. We know which cuts we made last time-like eliminating investment in R&D-weakened IT's ability to respond when business picked up and CIOs were expected to contribute to innovation.

Let's assume your organisation is doing all the right stuff -consolidating servers, datacentres, vendor licenses and maintenance agreements; deferring new purchases and outsourcing commodity services under contracts that really do save money.

Let's also assume that you've offered early-retirement incentives for employees who are eligible, that you've terminated any contractor roles you can live without and that you've deferred filling vacant staff openings. You know that you're doing all the right tactical things. So what shouldn't you cut and where else should you look?

Protect hard-to-fill roles. Architects, database administrators, relationship managers, security specialists and business analysts: It took you a long time to find them-and even longer for them to understand your tech environment, business constituents and enterprise strategies.

How much time has it taken them to identify those investments your company sorely needs but no business leader or steering committee has thought to request? These folks know what's needed next year and beyond, though their value isn't always obvious to the CFO.

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