Upgrading infrastructure is a high priority

Security and infrastructure consolidation will present heavy burdens for several Canadian IT departments in 2004, even though a recent IDC study placed upgrading infrastructure at the top of the priority list.

“I think we’re all trying to see how we can take the same budget we’ve had over the years and do more with it,” said Frank Anderson, vice-president of enterprise systems and infrastructure with Bell Canada in Toronto.

Toping Bell Canada’s wish list is to keep pace with its growing capacity requirements, to consolidate wherever possible and to ensure its network is secure. At the Bank of Montreal in Toronto, cost cutting, security and infrastructure consolidation are the issues that reign supreme for 2004.

“What we’re seeing is an opportunity, if we leverage our infrastructure, to lower our costs,” said Karen Metrakos, executive managing director of BMO Financial Group. “Our spending has been consistent year-over-year, investing in renewing technology where we needed to renew it. Now [we are] focussing on renewing it in a way where we are basically using that opportunity to consolidate more and centralize more.”

IDC’s survey of over 500 end-user organizations in North America found that both the Bank of Montreal and Bell Canada’s priority lists seem to match the norm. The study found that infrastructure was ranked as the number one concern for 2004, narrowly ahead of cost-cutting, integration and security. Personal computers and servers were identified as the most critical infrastructure segments in need of funding.

At Bell Canada, the more than 30,000 laptop and desktop computers undergo a regular refresh, but since 1999 the company – similar to other organizations in North America – has tightened its purse strings and upgrading infrastructure was put on the backburner.

The refresh cycle begins at three years and can be pushed back to four years, if necessary, Anderson said. “What we’ve been trying to do is to look at how to make investments to lower the cost of operations.”

Consolidation on back-end servers was a way to save some money for Bell Canada, lowering not only software costs but also maintenance.

“It’s still tough out there,” Anderson said. “Because spending has been a little tight, the business really wants a lot more, but there isn’t a lot of money to go around. It’s really forcing us to be really efficient with the money that’s out there and make it go around.”

Having less money to spend is something that isn’t new for IT departments across North America. Since 1999, PC and server upgrades have been a low priority, said Stephen Minton, analyst at IDC in Framingham, Mass.

“It comes from several years where there’s been very little spending on infrastructure because company’s have seen that this is a way to cut back on their expenses while the economy has been in the doldrums,” Minton said. “The idea has been spread that infrastructure can be stretched out a little longer.”

Now that the economy is showing signs of improvement, particularly with IT budgets, there’s a lot of pent-up demand for replacing some of the old infrastructure, he added.

As pricing gets more competitive in the server and PC markets systems, and systems are getting older, companies are finding both an opportunity to keep up with their competitors. This doesn’t mean that budget cuts are a thing of the past though, Minton warns, as the amount of money available to IT departments in 2004 varies across vertical industries and regions.

Overall, the survey did find that IT budgets will see a slight increase in 2004 because the economic outlook is brighter. Spending is still anemic, but growth is up at least one per cent from 2002, which shows signs of recovery, Minton said.

Regardless, “if companies don’t have money to spend, they will continue to put things on hold and do the best with what they can. If the economy plunged into another recession, companies would find they could get another year or two out of their PCs.”