CXO

2002 budgets may show slow increase

We know that IT budgets are tight, but industry pundits are predicting an increase in IT spending in 2002. Here's what the experts are saying and some things you can do to weather the economic storm.


IT managers facing a lean budget and staffing limitations shouldn’t expect relief in the near term. Many IT budgets are tight and have been for some time. But that’s the bad news. The good news is that, according to industry pundits, IT managers who can hold out a few more months may find that their organization’s purse strings will loosen.

IT experts predict that the overall economic climate should improve during the second half of 2002. But budget growth will be gradual.

The question is: What can managers do to survive until the current economic situation improves?

Sept. 11 attacks changed budget forecasts
Sept. 11 changed the economic landscape of many industries. For the IT industry, the effect of the attacks was reflected by Giga Information Group, which changed its predictions regarding general IT budget numbers following Sept. 11.

Giga’s pre-Sept. 11 predictions called for an IT budget decrease in the United States by around 3 percent in 2001, but that in 2002, managers could expect a 7 percent increase. The consultancy’s recent report, “Giga’s Updated Forecast for US IT Budgets Post Sept. 11,” published in December, changed the original numbers to a 5 percent decrease in 2001 with only a 4 percent increase in 2002.

These numbers do not mean much to managers who saw severe cutbacks in their budgets in recent months, but Giga’s predictions do show that budgets are expected to grow. Pundits expect the growth to be slow, perhaps so slow that many managers won’t see increases for a few more months.

Determine what you have
What many managers have to do now is make the best of a bad situation. Perhaps you have a smaller staff than you did this time last year or maybe you can’t replace old equipment or upgrade software right now. Yet, even with these missing advantages, you can weather the storm by taking a serious look at the resources you have now and maximizing how you use them.

The key is how to make your existing resources more productive and to manage multiple assets, said Vance Loiselle, the vice president of product management for BladeLogic, a provider of server management software.

“There’s more of a keen sense of looking at current talent to make sure there’s an understanding… of their strengths” and then determining how to best apply those talents, said Brad Turkin, the senior vice president of Comforce Corporation, a global IT consulting and staffing firm.

For example, managers can start detailing the skills of each shop employee and ensure that a particular employee works on tasks that he or she is most qualified to perform. “We’re all looking at maximizing on the talent and the people we have but for the least expenditure,” said Turkin.

A cost-saving strategy may also include cross-training employees to cover gaps in a shop’s skill set.

Loiselle said, “…what organizations now are doing is actually reorganizing some of their IT groups to cross-pollinate skills. So some of the things that we’re seeing are [cases where] UNIX administrators and NT administrators are being cross-trained. [Organizations] are realizing they have to get by and do more with less and really focus on being more productive.”

Brian Chavis, the president of ARGroup, an IT consultancy, agreed with this type of strategy, especially for managers who have fluctuating project schedules. “You have these peaks and valleys, and I think what managers are learning is what key staff can they keep to maintain the minimal acceptable level of service,” Chavis said, “…and then [determine] how they can get resources in place… when they need them so that the amount of resources available…matches the workload.”

Gone are the days when shops could argue for the newest upgrade or software and easily get it. “For example, we’re not seeing people upgrading their systems for the sake of upgrading to the newest level of technology. Shops are looking at the value of such moves more closely than they would have before,” Chavis said.

“There’s more justification going on. Justification in terms of does the department truly need an additional programmer,” said Turkin.

One way to maximize your budget is to make sure that what’s in the budget will meet the organization’s business goals. “Focus on trying to align your IT projects with the business needs and goals of the organization,” said Loiselle.

“Standardizing operations more across the board really kind of tightens up the IT structure so that it supports the business," said Terryn Barill, the founder and CEO of Terryn Barill, Inc., an IT consultancy.

Recovery signs are emerging
Some signs of a recovery already exist. Consider the rise and fall of the need that shops have for IT consultants and other IT service firms. For example, Chavis said that his consultancy felt the economy’s damaging impact sooner than other organizations.

“With services, our whole business climate was starting to change ahead of time. So the economy, for us, changed awhile back, and what we’ve seen is a little different thinking. Our clients are more interested in predictability [and] certainty,” said Chavis.

Turkin said that the need for Comforce’s recruiting services has grown in recent months, signaling a need for more IT professionals. “By third quarter, our expectations are that [budgets] will be at a rate that is manageable and is more in par with pre-Y2K,” said Turkin. “We’re already seeing that slow growth pattern now,” he added.

What are you doing?
We want to know how you are weathering the current economic situation. How are you recycling hardware or reallocating your workers’ duties? Drop us a line and tell us what you’re doing.

 

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