IT budget cuts: penny wise but dollar foolish?

Jason Stamper’s recent blog post “10 best technologies to beat the downturn,” highlighted some ideas for IT professionals to streamline budgets by using affordable technology rather than cutting back on IT resources. The economic downturn potentially represents a great threat to IT -- yet to businesses which are dependent on IT (and this is increasingly the case); any unexpected or ill-conceived cuts to IT resources may have a profound and adverse impact on IT services.

Business survival, particularly in certain sectors, will necessitate cost-reduction; one of the quickest ways of realising such an objective is by reducing workforce. This puts a greater strain not only on the people who remain, but also on the quality of the IT services. Because of the business’ increased dependence on IT, a drop in service quality in today’s environment will likely result in more severe business impacts than in the past.

Consequently, many quick cost-cutting fixes to the ICT infrastructure may prove more attractive than worthwhile. To truly understand how to reduce cost, IT professionals need to change their approach more fundamentally and adopt a service perspective. Rather than buying seemingly cheaper hardware/software for their network or laying off staff, IT leaders need to focus on how the different parts of IT relate to service and what value those services derive so that the consequences of decisions, particularly in terms of business impact and potential risk to quality of service are always thoroughly understood.

Only then will they be in a position to identify the areas worth investing in and reduce spending to others accordingly. To put it simply, when they understand what tools they have in the box and can map the dependencies of their IT machine, they will be well placed to be that ever-beneficial step ahead of the CFO. As one author opined, “Careful With That (IT) Axe, CFO!”

- Jim