Research carried out by Macehiter Ward-Dutton (MWD) and published today reveals that CIOs are not expecting their budgets to be drastically cut by the current economic downturn, which, thankfully, we are now allowed to call a recession.

This research and discussions had with leading CIOs at last night’s La Fosse Associates event Maximising contribution in a changing economic environment revealed that CIOs are using the current economic environment to prove the real value of their department. Speaking to a packed audience Robin Dargue of the Royal Mail and Tania Howarth of Birds Eye discussed their strategic decision making.

Speaking to Group CIO for property management company Duncan Scott agreed with a presentation by Howarth on the merits of insourcing as well outsourcing in the current climate. Scott also made it clear that these are the times where CIOs prove their management abilities and make difficult decisions. This is not the time to think about whether you are liked and Scott said the sheer cost of employment in the UK will drive outsourcing.

Neil Ward-Dutton of MWD, who carried out the research in association with summed up the findings in the below five points:

1: The economic downturn will affect enterprise IT budgets, but won't lead to drastic cuts. Most enterprises are savvy enough about IT to know that when managed well, IT has the potential to drive greater business efficiency and flexibility - both of which are critical today. Big ongoing transformation projects will continue to run.
2: In managing expenditure, CIOs will look to continue to minimize fixed IT costs through technologies like software and server virtualisation, and in addition we expect many hardware refreshes and software upgrades to be deferred.
3: When it comes to servicing new requirements, CIOs are looking to a broader range of sourcing options in order to manage costs, rather than radically altering the amount of IT work they outsource or send offshore.
4: In particular CIOs are much more aggressively exploring the potential of Software-as-a-service (SaaS) and open-source software for new requirements, on top of their current sourcing mix. These approaches avoid capital expenditure. In addition, new projects will have shorter timescales and need to provide "payback" much more quickly.
5: It might be tempting to go all-out to reduce IT costs, but this can be dangerous as it can set unhelpful precedent and expectations as well as leading to business execution challenges. It's much more effective to commit to making efficiency improvements, but to put forward proposals to "recycle" some of the resulting savings to drive key business projects. The better connected you are to business peers and the more able you are to speak their language, the better the position you'll be in.
Great times ahead for CIOs to prove their management credentials, challenging times, possibly for vendors, as someone more influential than I said, “we live in interesting times”.

Be part of the Debate

CIO Debate articles draw in part on the first of a series of monthly CIO UK polls carried out in conjunction with UK-based analyst firm MWD.
Our next poll is designed to find out what CIOs are doing in the area of collaboration and social software: your input is highly valuable. We’d very much appreciate your thoughts – just go to The results of the poll will inform our second article, which will appear in early January 2009.
If you would like to contribute your thoughts to the above discussion and you are a CIO in the UK or Europe, please join the group on LinkedIn or contact the Editor, Mark Chillingworth via LinkedIn.