Turbulent times mean another IT budget crunch

Australia’s IT industry is hunkering down for an uncertain ride as local and world events send a wave of caution through the industry.

Already working under severe pressure to justify their value in an economically rocky period, IT professionals now await the repercussions of the U.S. retaliatory strikes for the Sept. 11 terrorist attacks and Australia’s general election set for Nov. 10.

Philip Nesci, CIO for Orica Australia Pty. Ltd., believes the war against terrorism will “toughen” the world economy.

“We are scrutinizing projects a lot more and looking closer at ROI (return on investment). If there is not an immediate benefit from the project it is being seriously reconsidered.”

Gartner Inc. research director Barb Gomolski agrees. “We’re seeing almost a complete halting of discretionary spending (for IT), and a greater amount of scrutiny and a desire to prepare.”

Gartner analysts warn that having plans in place and backing them up with the necessary products and personnel will cost money; being caught unprepared during a crisis is a risky and unacceptable choice that could lead a company towards ruin. An immediate upside of being prepared for disasters is that it is bound to yield an improvement in overall efficiency, they said.

Greg Carvouni, CIO for the New South Wales Roads and Traffic Authority, said his department has had quite a few internal discussions on disaster recovery. “We are quite set up in this area, but are in the process of improving it a bit so our network is more self-reliant and we are able to recover seamlessly when the likes of Telstra goes down.”

Both Nesci and Carvouni believe IT budgets for next year will “definitely” be lower than this year, and investments will be not altered as a result of Sept. 11 issues.

“I don’t think we will be spending more on security as we already have those mechanism well in place,” Nesci said.

IDC Australia’s research director Joel Martin agrees that times are still tough for the IT department, but in regards to Australia’s economy, he believes a recovery is not far off.

Martin said the economy will remain sluggish until February, not as a result of the worldwide economic downturn or any military activity, but “just as a carry-on from our present situation.”

“If you look at the strength of the Australian economy, we are very self-sufficient and strong. I believe the economy will rebound in March until June 2002, and then really pick up after that.”

Martin said companies will wait until the election is over before they start new contracts, but after that budgets will continue to focus on security, storage, outsourcing, business process outsourcing and mobility issues.

“I believe teleworking will get a huge push next year. As the price falls for devices and more people want to work remotely … there will be a business push for more remote workers.”

How IT departments will cope with this forecast surge will “depend on the industry and the company”, Martin said. “I think many IT departments will be looking to suppliers, integrators and software vendors for support.”