Prepare for hard times ahead

Last year, the bubble burst for many dot-coms when they learned that profits really do matter after all. Now, weak spots are showing up in a much broader swath of the U.S. economy, and IT executives are coming under increased pressure to cut costs and speed up the delivery of revenue-enhancing technologies.

Even CIOs operating under generous budgets set last year when the economy was robust say they're reprioritizing projects and looking for ways to trim operating expenses.

But several senior IT managers interviewed by Computerworld who have seen the budget ax before say they're shrugging off renewed pressure to meet short-term financial goals. Some even say the pressure is a good thing. "It makes people rethink and rescale what it is they want to do," says Allan Ditchfield, an independent IT consultant in Marion, Mass., and a former CIO at the Progressive Corp. in Mayfield, Ohio.

Pressure on companies to improve short-term financial performance often leads them to avoid long-term "big-bang" projects -- such as enterprise resource planning rollouts -- that have high failure rates, Ditchfield says. "A project squeeze helps you keep focused on what's real and what's desirable," he explains.

Projects that will receive funding priority in the coming months include those with a high likelihood of making quick improvements to a company's bottom line, says Thornton May, chief awareness officer at Guardent, an information security consultancy in Waltham, Mass.

"There's a flight to quality," May says. "The economy is slowing down, and there's the sensitivity that you have to spend smart."

Christopher Horrocks, a vice president and CIO at Selecterra, an online business-to-business marketplace in Chicago, says CEOs are right to demand that IT projects meet clear financial goals.

"If you can't estimate, with some statistically provable likelihood, what the payback on a systems investment is going to be, I wouldn't touch it with a barge pole," says Horrocks, who has advised more than 200 corporations as a consultant.

In his view, Horrocks says, public companies should be required to report major systems changes to the U.S. Securities and Exchange Commission. "A company tends to be very exposed during that period -- rather like a soft-shelled crab," he says. Such a public reporting rule would encourage greater involvement among senior management in IT planning, he explains.

Mix It Up

Sign up for ITworld's Daily newsletter
Follow ITworld on Twitter @IT_world

• Email
• Print
• Share
  • Slashdot
  • Digg
  • Stumble
  • Reddit
  • Newsvine