Analysis: Is now really the time to cast off the IT spending shackles?

The days of dot-com abandon and free spending are back with us - or so we could be forgiven for thinking after a glance at some of the latest research from the big analyst houses.

Meta Group said earlier this month that the days of 'sweating' existing IT infrastructure for more efficiencies and performance are over and that companies should start investing in new technologies again.

This was backed by Gartner at its Symposium in Barcelona this week where "growing evidence of a tech recovery in 2004" was highlighted along with the next wave of innovation that IT leaders should be looking to invest in.

But a closer look at CIO and IT director priorities shows that the days of investing in new technology for the sake of it, or just because everyone else is doing so, are still most definitely a thing of the past. The dot-com tech boom and subsequent crash have changed the way the CFO and the CIO judge IT investments for good.

To a man, some of the UK's leading IT decision-makers on silicon.com's CIO Jury today said increased investment in IT will only happen where there is a sound business case – and even then only in parallel with evidential reductions in day-to-day IT running costs. The poll may not be as scientific as the 1,000+ surveys done by the analysts but it's a fair bet you'd hear pretty much the same sentiments in most boardrooms across the country.

Dharmesh Mistry, CTO at consultancy edge IPK, said: "Yes, times have been hard but technology spend is always about driving business benefits such as increasing revenue, reducing costs, being compliant with laws/regulations and mitigating risks."

But he warned that sitting tight can be just as bad a business strategy as blindly throwing money at new technologies if it's done for the wrong reasons.

"For some people 'Making the most of what you have' is the same as 'If it ain't broke don't fix it' when in fact these are two very different things," he said. "Making the most of what you have is ultimately a sensible thing to do but companies should be careful that they constantly re-evaluate older systems."

Frank Coyle, IT director at John Menzies Distribution and a CIO Jury member, also expressed caution at the analyst statements.

"At Menzies we will not be raising IT investment just for the sake of it. The need for each project, or change in strategy, to be cost justified remains a key issue when deciding to invest," he said. "Business remains tough and IT is having to fight for, and justify, every pound."

At UK telco BT, CIO Sinclair Stockman echoed those sentiments. "Yes they [CFOs] do accept it is the time to invest but no they [CFOs] don't accept that the squeeze is over - we have to do both simultaneously," he said.

As highlighted in our CIO Jury story there is, however, still room for investment in the right areas. British Airways CIO Paul Coby said the airline is reducing its operational IT running costs but increasing investment in new IT by 13 per cent as part of the 'customer-enabled BA' programme of self-service and online ticketing and check-in.

Gartner chairman and CEO Michael Fleisher, speaking at the Gartner Symposium in Barcelona this week, urged CIOs to stay in touch with key emerging technology developments.

"While IT leaders must continue to maintain vigilance around tight cost control, they now face the challenge of driving innovation and growth within their enterprise," he told delegates.

The next decade will be one of 'the connected society', driven by RFID, PDAs and smart phones along with wireless communication technologies, and improvements in data storage and access, according to Gartner. A 'real-time infrastructure' that is capable of handling and processing all this information will be needed by firms.

Ultimately the message from users on the frontline remains one of caution – keep costs under tight control and invest any savings wisely when there is an opportunity to gain competitive advantage.

The advice is best summed up by Barclays CTO and CIO Jury member Kevin Lloyd. "What is most likely is continued investment, where corporations have been prudent, to ensure a blend of necessary (to keep the business going), mandatory and income creation/cost reduction strategic investment."