Cut your IT costs now, warns Gartner

In the face of a possible recession, IT managers must cut their IT costs immediately, said analyst firm Gartner. Analysts at the firm believe economic factors had deteriorated to a point where action is required on the IT spending front, and advised businesses to prepare for cutting IT costs.

The call to slash costs comes after previous advice to prepare two budgets for 2008. In October, Gartner told clients at its Symposium conference to prepare two IT budgets, in the face of economic uncertainty for 2008. One budget should assume business will continue as usual and another budget should expect the worst, a recession.

It now appears Gartner believes the industry faces an economic downturn, as the analyst firm has urged businesses in the U.S., and in countries where gross domestic product (GDP) growth is predicted to be less than two per cent in 2008, to immediately prepare for IT cost cutting.

“Last October we published research recommending that organizations should prepare two IT budgets for 2008, the first reflecting guidance already provided by senior decision makers and a second ‘backup’ budget assuming the need to cut costs in response to the arrival of a business slowdown,” said Ken McGee, vice-president at Gartner.

“Since that time the factors we based the research on, such as GDP growth projections and expert predictions for the likelihood of a recession, have worsened to a degree that convinces us it is now time for clients to prepare for cutting IT costs.”

Gartner said it was crucial for firms to select their brightest IT people to lead a cost cutting drive instead of performing their regular daily tasks, and for their bonuses to be based “exclusively” on the amount of money their team saved throughout the year. Analysts also recommended an internal auditor to ensure that IT savings were clearly demonstrated in companies’ overall figures.

Legal guidance was also vital, Gartner said, so that IT cost cutting teams could make savings without upsetting contractual obligations with suppliers.

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What is up with IT spending in 2007?

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Jim Love, Chief Content Officer, IT World Canada

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