CIOs face budget cutting pressures

Last year we talked about CIOs – who are both the masters and the victims of doubletalk and who are under enormous pressure to provide more to their users and at the same time, trying to keep spending under control.

We thought we would check in with our CIO buddy Manny Fernandez, not to be confused with another of the same name who is as popular in Boston as Bucky Dent (don’t ask).

How’s your budget process going?

Awful. I thought I had the mandate to spend 4 per cent more than last year… but that’s on hold. We used to spend about 6 per cent on IT/communications… but it looks like it could be 4.5 per cent to 5 per cent this year. Management keeps making cute little comments about “sharing the pain” and “use it up, wear it out, make it do or do without”.


You bet. Storage is like a tapeworm; each year it takes more and more of my budget. So I do the short term cutesy things – like delaying LAN upgrades, cutting outside consulting services and virtualizing my servers. But there is a limit.

Virtualize PCs?

Not yet. But someday someplace we have to figure out how to throw away some data. Everyone is paranoid. Right now our storage is growing 50 per cent per year in terabytes. We try to rationalize all the time – without taking risks. But we are soon going to be off our mainframes. We said “death to Linux” and we don’t support Apple.

Right now we are 70 per cent laptops and that trend isn’t going to stop. So far we have avoided supporting BlackBerries and iPhones (and soon Google-phones) but that is going to be a losing battle; those suckers are really computers.

New applications?

Not many. We are still deploying what we started two years ago. But we are looking more closely at teleconferencing again. This happens every time we cut travel budgets inside the corporation. We still have a lot of underutilized hardware. We will see.

More outsourcing? Offshoring?

We got really down on outsourcing a few years ago – but we have moved a fair amount of support to Bangalore and Hyderabad. Application development hasn’t been as easy as we thought. Outsourcing is like the flu; as soon as the economy gets socked, it comes back.

How do you handle the demand for everyone to have an upgrade of their PC each year?

We try to hide it – put it on the division’s budget. Let’s face it; we are a high priced technology purchasing agent. What we really like to do is cut our expenditure on server spending. The day that every app got its own server has got to end. Right now about 25 per cent of our server workloads are virtualized. If the economy continues to suck, we’ll grow this number to 35 per cent. The dropping cost of storage helps as does the cost of laptops. We have moved to voice over IP in a big way.

But counter-balancing that is the multi-year SAP implementations that suck up money like a vacuum cleaner. That’s sacrosanct – don’t ask me why. We are stealing from Peter to pay Hans but we are half done.

When will you be done?

Never. Maybe longer.


Me? Why would I be frustrated? Just because I have to be both the Tech Visionary, the mean-spirited Cost Accountant, the Czar of Platforms, the Purchasing Agent and the Applications Guru? Just because I have to provide a higher level of service and availability at lower levels of cost each year?

Cutting your staff?

No and I hope not to. That “share the pain” comment by management scares me. Sounds like you are between a rock and a hard place.

Not as bad as my buddies in financial services. They used to have a Black Belt in Spending. For most vendors, that sector was 20 per cent of their total business. So every vendor – Microsoft, IBM, CA, SAP, Cisco – now is in here all the time. It’s getting so bad that I have to disguise myself as a Fed Ex employee just to get through my waiting room.

That bad?

Absolutely, positively.

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Jim Love, Chief Content Officer, IT World Canada

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