Look on the dark side

CIOs should plan now for the next bubble burst

Because of the recent turmoil in credit markets around the world and continued uncertainty about the future economic climate, CIOs should create two IT budgets for 2008, according to research group Gartner.

The firm has advised CIOs to create two separate budgets; the first should reflect the guidance already provided by senior decision-makers but this should be supplemented by a second back-up budget that assumes the need to cut costs in response to the arrival of a business slowdown.

"Although the financial outlook for 2008 remains far from certain, waiting for a clear economic trend to appear prior to taking action is not a prudent option," said Ken McGee, vice-president at Gartner.

"There is already sufficient concern about the possibility of a business slowdown for next year from enough credible and independent sources to suggest that preparing a backup cost-cutting IT budget now is just plain good management."

CIOs need to have a recession budget and business plan ready for immediate implementation long before being asked to reduce costs, McGee added. To be meaningful, such plans should target a decrease in IT spending of at least 10 per cent below the highest annualised IT spending run rate levels attained in 2007.

CIOs and IT managers who play their part in preserving as much enterprise profitability as possible will benefit the wider organisation, he claimed. "Creating a responsible alternative recession IT budget now will demonstrate the type of innovative and forward thinking that senior executives expect to see from their staff. It will also show the kind of flexibility and agility needed to respond to fast-changing economic and business conditions."

McGee said that rather than viewing the possibility of a significant business slowdown or recession with trepidation, organisations should use it as an opportunity to create a solution that will enable the enterprise to react with speed and certainty if the worst economic concerns come to pass.

Len Rust is publisher of The Rust Report.

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