The Economy May Suffer, but IT Will Survive

By P J Connolly

September 29, 2008 —  (Page 1 of 3)
I can’t conceive of a worse time to be thinking about an IT budget than these recent weeks. For example, I’m writing this on the morning after the government seized and sold one of the banks in which I keep money. I’m far from alone, of course; the current economic turmoil is playing havoc with everyone’s expectations and plans as summer turns to fall.

It’s clear that IT departments are generally going to spend 2009 making do with less; in some cases, a lot less. In uncertain times, businesses of all sorts traditionally reduce their expenses, and IT’s always a target for cost cutting.

But one expected 2009 to be a lean year already, based on what people were doing with their remaining budgets for this year. According to Forrester Research’s surveys from the second quarter, two-thirds of companies reported that they were either holding off on discretionary spending or had already cut their overall budgets for IT (see chart).

The figures, released in early September, indicate that companies are also looking at their budgets for IT services; seven in 10 indicated that they planned to go back to service providers in hopes of cutting better deals, and 16 percent said had they already reduced service levels.

This is grim, but it could be a lot worse for many of us. It’s not 1929, not by a long shot.

Although politicians are invoking the specter of the Great Depression, and many families are simply hunkering down and praying for better mortgage terms, one thing that I don’t see happening is the kind of bloodletting in IT that most of us remember from the dot-bomb days.

Here’s why: To put it simply, most businesses have not used the “Web 2.0” phase as an excuse to run hog wild on technology spending. There was a time about 10 years ago where that might have been the case, but from everyone I talk to and observe, what I’ve noticed has been the opposite. What I’ve seen over the last five or six years has been a steady, yet continuous, rationalization of IT operations.

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