CIOs will have some explaining to do

04 Dec CIOs will have some explaining to do

CIOs are taking stock of their accomplishments in 2009 as they are wrapping up their 2010 planning discussions. Given the focus on cost cutting, many CIOs will be eager to show how they were able to “do more with less.”
IT’s success in cutting their budget while maintaining system availability in 2009 is a major accomplishment. According to a survey of more than 1,000 CIOs conducted in the first quarter of 2009, CIOs achieved these results by one or more of the following actions:
• Contract renegotiation and maintenance triage – supplier management
• Postponing investment projects to achieve cost savings while preserving operational resources – demand management
• Consolidation and virtualization of the data center to raise – operational consolidation
• Hiring and payroll freeze for IT personnel – workforce reduction
CIOs should be understandably proud of these accomplishments. 2009 is a tough year that required decisive action regarding your resources, priorities and results.
Do not be surprised if these accomplishments meet with a different reaction from your business peers. The business has come to understand that IT required increasing investment levels to maintain quality of service. Now the CIO is reporting that they are able to maintain service levels while reducing budget.
This begs the question, what has changed about IT?
There are several possible responses.
• IT made temporary budget cuts just like every other group in order to share the pain during tough economic times. IT made the cuts needed to meet this year’s financial plan. Based on this response, the business should expect IT spending to increase when they reverse these cuts when the economy recovers.
• IT reduced its budget because the company postponed application and technology investments. IT investments normally account for between 15 to 30% of the budget and postponing those investments and maintenance enabled us to achieve our financial goals. Based on this response, the business should expect IT spending to increase when the business needs increased application functionality.
• IT has changed its operations and lowered its cost structure through a combination changes to the infrastructure, IT processes and raising its productivity that will enable IT to work smarter with greater agility. Based on this response, the business can look to IT to play a greater role in executing the business strategy without significant year-over-year budget increases.
What will be your response?
How will you explain IT’s ability to deliver with significant budget cuts without giving the business the impression that they have been overspending on IT for years?
Recent columns by Mark McDonald

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