Cutting costs top IT priority

In the latest instalment of its 2003 Worldwide IT Benchmark Report, the Meta Group Inc. has found reducing cost has become the number one IT priority. Yet, it also appears that many organizations have cut all they can.

After making huge cuts in IT costs, including staffing cutbacks, server consolidation and contract re-negotiations, a large majority of CIOs believe further cuts could put their businesses at risk, the study revealed.

Rounding out the top five priorities behind cutting costs were business alignment, increased productivity, project management and improved software quality.

The biggest cutbacks have come at the expense of employees. IT organizations spent 57 per cent of their budget to operate the business. And new projects are being scruntinized more closely, now requiring justification by all business units.

And, while some reports have predicted a rise in IT spending by the end of this year or early in 2003, Meta maintains the spending increase will be nothing more than an “artificial bump” and spending will merely increase as a percentage of revenues.

Not surprisingly, the main reason CIOs cited to explain why spending remains tight was weak profits.

One CIO at an Ontario-based communications and infrastructure company, who wished to remain anonymous, agreed that cost cutting was the company’s number one priority.

“We’re flat-lined now, and I believe there won’t be more cuts because of that. We’ve bottomed out, and we can’t cut anymore.”

The company’s staff was only reduced by five per cent across North America, the source said, adding the organization spent 70 per cent of its IT budget last year on new servers, hardware and an enterprise resource planning (ERP) system.

When addressing costs, the CIO said the company was trying to reduce its telco costs and was working “closer with vendors to get better pricing (and) extend the warranty pricing.”

The Worldwide IT Benchmark Report data was collected via a survey of 34 countries and a quantitative survey of data collected from a panel of 25,000 IT professionals.

For more details on the study, visit the Meta Group online at

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Jim Love, Chief Content Officer, IT World Canada

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