CIOs should learn to deal with cash constraint: Gartner
- 17 June, 2009 11:57
Having a positive ROI may no longer be enough to get your next major ICT project over the line, according to Gartner.
Speaking to CIO, Andy Rowsell-Jones, vice president and research director in Gartner’s CIO research group, said that do date the phrase ‘cash is king’ had largely been a rhetorical statement.
However, in light of the ongoing global recession, CIOs now had to learn to deal with organisational capital rationing, he said.
“The belief has been that if you have a positive ROI or MPV then you can get the money from somewhere,” Rowsell-Jones said. “Now there is a new realism in town that despite having a positive ROI you can’t necessarily get the cash as the organisation is capital constrained.”
Along with capital rationing being something that many CIOs would not be used to having to deal with, CIOs would also likely need to get used to the idea of reporting in to the CIO, he said.
“There are increasing numbers of doom and gloom stories about the CIO having report to the CFO; but that’s quite a sensible response to a crisis,” Rowsell-Jones said. “Having that rigour around governance, and having telephone book length business cases for IT projects, are all sensible responses to a financial crisis – rationing capital and driving costs down.”
In light of the extra pressure on IT budgets, Rowsell-Jones said CIOs should make the effort to remind CEOs and CFOs that globally, ICT as a percentage of op-ex was on average only about 6 percent of total organisational costs.
“That means that 94 percent is being spent on something else,” he said. “ICT can be a way to make a substantial impact on that 94 percent… and position the business for when the upturn comes.”
In line with this, the projects which were likely to get the green light were those that were aimed at reducing cost - virtualisation, legacy systems and applications modernisation, video conferencing, and BI, Rowsell-Jones said.
“If it comes down to the choice between spending on the supply chain or a CRM system, the supply chain is probably going to get the budget,” he says. “Projects which drive costs down will get the budget rather than spending which may have seen a doubling in market share in the good times, but which were a bit of a risk.”