What’s a CIO to Do?

Make sure cuts don’t hamper growth prospects

Forced to cut budgets and complete scheduled projects on time with fewer resources, CIOs are facing one of the most challenging years ever—one in which basic survival will take precedence over rolling out the latest technological marvels or gobbling up market share.

Luckily for them, analysts at market-research firm Gartner are offering some free advice to help get 2009 off to a good start. First and foremost, the analysts said, CIOs need to safeguard future growth prospects while making their cost cuts.

“The unfolding economic crisis of late 2008 has created a more challenging situation than many businesses and most CIOs have ever experienced,” stated Mark Raskino, vice president and Fellow at Gartner. “They face a daunting and uncertain year ahead. Many CIOs have already been instructed to operate with lower budgets and many more expect such instructions. Chief executives need to cut short- term costs very quickly to cope with volatile market sentiment in many industries and countries, but without damaging recovery growth prospects.”

Enterprises can take several steps to reinforce their enduring strengths and assets. To maintain legacy skills and experienced labor pools, Gartner recommends that CIOs establish alumni networks. Efforts could range from a company IT alumni association and use of web social networking tools to bounties where staff are paid for recruits they bring in.

CIOs might keep the door open on hiring to take advantage of the expected buyers’ market for talented and experienced technology professionals by staying in touch with a recruiter or two or keeping one or two key positions open.

Be prepared for change

Gartner also advises CIOs to prepare for the unexpected, use social networking systems, and start taking cloud computing seriously, since the firm expects that most computing will be done with way within the next decade.

In addition, resist pressure to cut staff needed for the long term because they might turn out to be difficult to replace. Instead, consider deploying them elsewhere for the short-term. Also resist cutting staff just because they are assigned to projects that have become temporarily unfashionable.

To help staff better understand the changes that are taking place, double the number of in-person meetings with them this year. Vendors will likely want to keep in closer touch with customers. However, CIOs should resist invitations of courtesy trips in favor of lunch at a low-cost restaurant to set a new tone for the relationship.

CIOs should reflect frugality but not be defined by it. On occasion, it might be important to fund training courses or special software development tools. Instead of empty cost-cutting gestures such as eliminating meeting snacks, CIOs can save more money by requiring that staff fly economy class.

And despite all the competition for their attention, CIOs should set aside time to keep up with key technologies such as e-book readers, Google Chrome, mini cloud applications, YouTube, and high-definition teleconferencing.

Emphasis on cutting costs

Services acquisition for cost arbitrage—or hiring someone externally to perform processes for lower cost—will likely be one of the year’s biggest buzzwords, according to IDC analysts who talked about the year ahead during a recent webcast. Outsourcing will continue to be a popular means of achieving cost reductions, especially for hard-hit financial services firms. However, US President Barak Obama is expected to resist any loss of American jobs.

There will be less interest in launching new platforms or technologies this year to the disappointment of hardware and software vendors. Rather, enterprises will attempt to squeeze savings out of consolidating databases or portals to simplify management and reduce cost of ownership.

For vendors, said Meredith Whalen, group vice president and general manager of IDC’s Vertical Market Business Units, the big question will be “How do you go about capturing what little growth there will be?” CIOs, meanwhile, she said, “will wonder how they can get projects accomplished with flat or declining budgets.”

Many technology executives are taking a zero-based approach—starting over with a blank piece of paper rather than attempting to retool existing budgets and planning documents.

Industries linked to discretionary customer spending—such as fashion or home furnishings--will fare worse than those linked to necessities—such as healthcare or food, IDC analysts said. Supply-chain management and innovation relating to the customer experience will be important to pursue, along with any other areas associated with cost savings or efficiency gains.

CW (8 January, 2009)