4 ways the fiscal cliff will impact CIOs

By Jonathan Hassell, CIO |  IT Management, FISA

If the situation wears on, you are sure to encounter a budget cut or two. It may even be a severe cut, like banking and financial service giant Citigroup shedding 11,000 jobs, and booking a related $1 billion charge in its fourth quarter.

It's a steep cut, to be sure, but of particular interest to CIOs should be where a substantial portion of those cuts are originating. Around 25% of the job cuts will come from reductions in its technology and operations group, run by CIO Don Callahan. According to The Wall Street Journal , Citi plans to achieve greater efficiency through increased standardization and the use of automated processes.

Sound like a familiar refrain? When the economy cools off and consumer demand drops, budgets need to adjust. This may even involve personnel reduction requests, which are never pleasant. There may also be a focus on reducing large, fixed, one-time capital expenditures-this is particularly true if your organization operates under the section of the tax code where some capital expenditures were able to be deducted 100% in the year they were incurred, not depreciated over several years-and translating those into variable operating systems that hopefully reduce themselves when used less and expand only when necessary.

Generally, this will mean delaying or deferring hardware requests and engaging more with cloud-based services that become variable expenses that flex with load and usage. Your giant, expensive refresh projects will probably end up on hold or scaled back significantly making it a fine time to invest in automation, to extend the life and functionality of your existing assets, and in the cloud.

3. A Longer-Term View to Fiscal Reckoning, Reconcilement

The fiscal cliff is getting a lot of attention, probably because it is a fixed date with tangible repercussions and consequences that everyone in power wants to avoid, but the story is much bigger and longer term than even 2013. We may be grappling with yet another "new normal" as the United States-and the world as a whole, to a degree-get their fiscal houses in order.

News: Cash-Strapped Feds Eye Tech Startups

Originally published on CIO |  Click here to read the original story.
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