We’re In A Recession, What’s An IT Department To Do?

by drjim on January 1, 2009

It's Not A Depression (yet), But IT Departments Need To Make Changes To Deal With The Recession

It’s Not A Depression (yet), But IT Departments Need To Make Changes To Deal With The Recession

Remember what happened to the IT industry back in 2001? When the dot.com bubble burst, pretty much the sky started falling and IT spending hit the proverbial brick wall. If you’ve been reading the newspapers or watching TV lately, then you’ve probably noticed that the global economic downturn sure looks like what we saw back in 2001. Should an IT department be worried?

The good folks over at Forester Research have just released a forecast for 2009. When they looked into their crystal balls, they saw that in 2009 IT spending will grow at its lowest rate in the past six years.

IT spending will actually still increase just a wee bit – it will grow to be 1.6% more than they spent in 2008. This will be a change from the past two years because IT budgets had grown by 4.1% and 7% in 2007 and 2008.

The reason that IT budgets will still grow just a bit in 2009 even though the rest of the world is shrinking is because the world has changed – businesses have grown so dependent on IT that they can’t help but spend as much or more than they did the year before.

For those of us who remember the dot.com crash (myself included), we shouldn’t be too worried about IT spending taking the long lasting nose dive that it did back in 2001.

The reason that things are different this time is because back in the dot.com days firms had overinvested in IT systems and staff. The thinking is that this time around IT departments have been running a much leaner shop for the past few years and so they won’t have to cut as deep as other departments may have to.

So what’s an IT department to do in this down cycle? Focusing on helping the firm to cut costs is one way that IT can help now and build good will for use later on.

A relatively simple project to consider is switching your corporate email system from an in-house system to an external on-line provider. Yes, email is a critical business application; however, it’s not unique to your business. Having your expensive IT teams spending time on keeping the email system up and running is taking away from other business specific work that they could be doing.

If your business is the creation and selling of software products, then you should be cautious going forward. Forrester’s study found that software revenue is predicted to grow at only 3.4% in 2009. Additionally, most of this growth will be coming not from new product sales but rather from support fees from previous purchases of software.

What everyone needs to realize is that right now nobody is spending any time planning for the future. This is a luxury that IT departments cannot aford to take. When the global economy snaps back, IT is once again going to be expected to start driving company profits!

What steps are you taking to prepare your IT department for the recession? Have you identified any cost cutting changes that you could make that would yield big savings? Have you considered having an external firm handle your email? Leave me a comment and let me know what you are thinking.

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