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By Andrew Donoghue, 6 April 2009 12:33

COMMENT

Recessions are the perfect time to hone your IT planning and penny-pinching skills, says Andrew Donoghue.

Times are tough. Yet while IT budgets are tight, most companies still expect their systems to carry on delivering and supporting the rest of the business. In fact, the more progressive companies are even looking at ways to use IT to help them get ahead during the downturn.

While it may make sense to try and innovate right now, for many IT departments doing so will feel like a strain on already thin resources. According to research from analyst Gartner, IT spending is set to drop by around 3.8 per cent this year to just over $3.2tr.

Gartner predicts that in 2009 the IT market will decline by more than 2.1 per cent - the drop we saw during the dot-com bust of 2001.

On the positive side there is still more than £2tr sloshing around the global IT industry - so what can companies do to make the most of the resources they have?

For starters, businesses can't afford to waste money on failed projects. So assessing and measuring risk must form a key part of any IT planning in this downturn.

Companies should be looking to improve how they measure every facet of an IT project in the current climate, says Laef Olson, chief information officer of hosted CRM company RightNow Technologies.

"Learn to measure everything - you can't improve what you can't measure," he says. "Specifically, measure your costs in terms of the function it performs, whether it is a transaction, a GB of storage or an email message. Use this measurement as a way to understand your cost structures and then work to make your functions more efficient."

Olson says downturns can be an opportunity to reorganise and improve IT operations - but the best IT departments should already be focused on cost. "Any CIO who has been in the role for more than a few years understands the value of maximising budgets at all times, not just during a downturn," he says.

There are also some relatively easy tactical things IT departments can do to make every penny count. "Call up your IT suppliers and tell them you need a five per cent reduction in their costs to you. Don't box them in - tell them you need a proposal from them on how they suggest you do it," says Olson.

Companies may even want to work out whether it makes sense to bring some IT functions in-house. For example, given that the cost of contract developers has fallen in recent months, it could be cost-effective to hire a programme manager and start doing your own software development.

While driving a hard bargain is possible in some spheres, in critical areas such as IT security it can be harder to know where to cut back without introducing significant risk. One solution is to try and take a consistent approach to security and avoid the urge to let it become a bottomless and unquantifiable hole for your IT budget.

Carlos Solari, former chief information officer for the US White House and vice president of security solutions for Alcatel-Lucent's Bell Labs, says: "Security is still viewed as a cost with uncertain value due to the haphazard approach taken by many today. However, costs can be driven out by taking a standards-based approach to security."

Adopting a consistent approach to IT security - and IT planning in general - should help to avoid unexpected costs in the future in the form of lost business hours due to attacks on critical systems, for example. "Consistency means not being short-sighted. By failing to implement security upfront there will be an impact at some point in the future - one that manifests itself in higher costs and brand impact," says Solari.

Planning is obviously key when trying to maximise IT budgets but what about technologies? Are there any that can help during a downturn?

Open source software is one area that may hold promise - some claim the development model comes into its own during a downturn.

"Not only does open source lower the acquisition cost for software but also dramatically decreases risk," says John Powell, chief executive of open source content management company Alfresco. "A CIO doesn't have to guess whether our software is going to work for their organisation: they can download the software, try it out, pilot it, and then come back to buy a support subscription as required. CIOs have less risk of failed IT projects with open source, and efficiency is the name of the game in a downturn."

Phil Andrews, UK managing director of Linux specialist Red Hat, says the downturn has acted as a "disrupting force", pushing some companies to investigate open source which they may not have considered in more stable times.

And even if companies decide an open source application is not right for them, the process of investigation could help in negotiations with others vendors. "Companies could deploy some systems partly on open source to show a full migration is entirely possible - which could give them more leverage in negotiations with an existing vendor," Andrews says.

Mark Taylor, chief executive of consultancy Sirius Corporation and president of the UK Open Source Consortium, says another benefit is that open source software also often has lower hardware requirements - so companies can avoid the costs of buying new kit and "sweat" existing equipment. "Cancel hardware upgrades and use the funds to extend life of existing estate by migrating to open source software equivalents," he advises.

Tough economic conditions often mean the IT department's plans and expectations need to be scaled back but they can also be an exercise in getting the most from what you have - a useful skill to develop for even the best times.