Economic meltdown hits IT plans

The economy has seen better days. Many IT departments started 2011 with cautious optimism and grand plans to modernize and expand, but amid the turmoil of the past month or so those plans have been whittled away.
Even before the current economic crises caused by the political extortion over the debt ceiling, and the subsequent historic downgrading of the credit rating of the United States, the economy was on a shaky recovery at best. In a survey of 563 IT professionals conducted by nCircle in March, 48 per cent of respondents claimed the economic downturn had affected security initiatives in their organization, up 11 per cent from 2010.
Businesses don’t like a climate of financial uncertainty. Capitalism is all about taking risks, but good business is about taking calculated risks with some measure of predictability. When there is economic chaos, companies tend to hunker down and hoard what they’ve got. When the dust starts to settle, and they can see who is left standing, and get some idea of which way is up, the flow of money is restored.
As the economy slides, the bar is raised for acceptable return on investment (ROI). In a good economy, when revenue and profit are flowing more freely, IT projects are approved based on less tangible returns, but when the economy tanks, businesses are quick to cut those projects and focus only on IT investments with a concrete impact on the bottom line.

What does that mean? That means that projects like virtualizing servers in a data centre or migrating servers and data to the cloud — projects with a clear cost benefit — will most likely proceed, but that other projects, like PC hardware refreshes, get delayed or canceled. New PC hardware may perform faster and improve productivity, but not enough to justify upgrading or replacing equipment the company already has that appears to be working fine.

When budgets are cut and money is tight, IT workers are asked to do more with less. Not only do businesses not hire additional IT workers to lighten the load and help IT operate more efficiently, many businesses may even cut the IT staff to save a buck and expect the remaining IT department to pick up the slack.

When the economy is going well, and organizations aren’t operating from a mode of simple financial self-preservation, IT departments can get the tools and services they need to make their jobs easier. With a smaller IT budget, managing and maintaining the IT infrastructure can be a much more tedious prospect.

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Jim Love, Chief Content Officer, IT World Canada

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