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IT strategy: Put IT on hold

Robert Jaques

Let’s get it right out in the open to start with: although this is the IT
strategy column, right now we do not believe that, for many UK firms at least,
IT strategy is going to be topping the list of priorities for 2008.

But we must hasten to clarify that we are not trying to do ourselves out of a
job, or you, dear reader, out of a column. It is simply that we do not believe
that, for many firms, this is going to be the year for big strategic IT
projects.

IT strategy will take a back seat in 2008 and, instead, it is going to be the
year of down and dirty tactical IT decision making. We would go so far as to
predict that multi-coloured Gantt charts that hardly anybody understands ­ least
of all the would-be project managers who drew them ­ are going to be thin on the
wall in 2008.

With the spectre of recession looming large over some of the world’s biggest
economies, 2008 is not the right time to begin jumping through hoops to develop
and implement long-term gold-plated IT strategies. The rapidly deteriorating
state of the major world economies will inevitably affect corporate spending
across multiple horizontal and vertical sectors. We have continued geo-political
instability in the Middle East. The recent sabre-rattling between the US and
Russia signals an unwelcome return to, if not a full-blown cold war, at least a
chilly skirmish.

Spiralling commodity prices have seen oil top the hugely psychological $100 a
barrel threshold, and basic food inflation is through the roof. And a series of
dire corporate results has seen the world’s stock markets plummet. Added to this
grim list is the so-called credit crunch arising from the US sub-prime property
market. All these factors are potent ingredients in the current cocktail of
global economic woe.

Some prophets of doom are even gnashing teeth and beating breasts predicting
that 2008 is going to be akin to the dotcom bubble bursting and the whole IT
industry will fall off an economic cliff. This is unlikely, but even if there is
not blood all over the floor, it is inevitable that some firms will go out of
business.

In this climate, the future is looking decidedly dodgy for ‘nice to have’ IT
infrastructure projects. Many firms that, a year ago, had pencilled in upgrades
of central business systems such as core financial packages, enterprise resource
planning applications or customer relationship management software for this year
will now hold fire given the current economic outlook.

Similarly, desktop upgrades with firms stripping out Windows XP in favour of
its bigger and more up-to-date sibling ­ and more hardware-thirsty – Windows
Vista are going to be viewed with deep scepticism by FDs.

The fact is that IT always has been an easy target when boards are looking
for cost-cutting and belt-tightening measures. The mantra this year will be, as
it has always been in past slow downs, “If it ain’t broke, don’t fix it”.

However, even against this backdrop, this is not to say that IT has any less
of a role to play for successful and savvy businesses. Spending will slow
inevitability, but certain projects will go ahead regardless. These will include
security infrastructure investments that consolidate and enhance enterprise data
assets. Other IT projects that will not be shelved are likely to include IT
systems supporting improved governance and regulatory compliance practices. At
the application level, any available IT capital expenditure will almost
certainly be taken away from the monolithic SAP and Oracle systems and targeted
at technology such as business intelligence, which is relatively inexpensive and
can offer compelling return on investment.

As many in the corporate world have been straining to jump on the green
bandwagon, it is pleasing to note that many energy efficiency programmes are
also expected to survive the spending crunch. But green-for-their-own-sake
projects will almost certainly end up as compost. Firms will be looking to
implement green initiatives that offer tangible cost savings and/or efficiency
gains. In this category will certainly be projects that improve cooling and
reduce power consumption of energy-zapping data centres.

Such investments will demonstrate that IT can help firms make the most of the
customers and the business they already have and to more precisely target and so
win new business.

Internally, if cannily deployed, IT can help firms optimise process
efficiency and demonstrate real measurable business benefits. But anyone blindly
ploughing on with planned ‘big ticket’ infrastructure rollouts had better be
very certain of their ROI projections, or make sure that their CV is up to date.

We’ve been saying it for ages, but perhaps this could be the time when
mainstream companies sort out the cart/horse orientation issues that so many
have traditionally suffered from when rolling out IT. IT is not an end in itself
and the firms that will survive and even prosper through this downturn are those
that put technology back where it belongs: as a service that delivers tangible
efficiency and business benefits.

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