The IT projects that will get scrapped during the financial crisis

So you’re working in IT at a bank, or any other company that’s likely to be affected by the deepening credit crisis and economic downturn in the United States. You know the belt-tightening is coming. Some staff may be let go, and projects that once seemed to have been rubber-stamped now come under much more scrutiny. Some items are going to have to be taken off the agenda for budgetary reasons.

Then again, it occurs to me that the last major downturn in spending occurred less than 10 years ago, and I’m not sure if the belts ever really loosened up. Instead, the IT sector as a whole got a lot more vocal about return on investment, to the point where it’s almost programmed into technology professionals who want to get executive go-ahead. Even the excitement around Web 2.0 technologies was tempered with an expectation of solid business plans from venture capitalists who remember the sting of the dot-com bubble. Irrational exuberance never re-entered the data centre. The industry hadn’t really had enough time to forget recent history.

With this latest financial catastrophe, vendors have been quick to keep expectations low, with Steve Ballmer of Microsoft admitting that spending will slow down. But that’s not necessarily what we should be worrying about. The premise of IT is that it can help businesses to run better. Without the right investment, or the confidence of senior managers in their technology staff, many opportunities to enhance processes or even generate new revenue might be missed.

The question, of course, is what ends up getting back-burnered? I would think those pursuing a virtualization strategy are relatively safe, given that the technology involved would allow a company to do more with less. There are, however, some upfront costs involved with virtualization (and I’m not even talking about the consulting fees) that might make some CFOs so nervous that they recommend projects be pushed off unless you can prove infrastructure is being severely under-utilized or that power costs are becoming prohibitive. SOA projects might be trickier to finish off for companies that have only gotten started, and others may decide not to pursue them at all unless the payback is obvious and near-instantaneous (which it’s usually not).

Vista upgrades? Fugetttaboutit. No one was bothering before the stock market collapsed. Cloud computing moves? Maybe, because it could offer a more on-demand model which, like software-as-a-service, allows for some price flexibility when demand is lower. The easiest projects to cross off most IT manager’s lists are probably things like unified communications. In times like these, you can skip the IP phones in favour of a good ol’ PBX.

Perhaps no technology project is completely safe during periods of economic uncertainty, but a few should be. These include analytics, master data management and BI, which are key to understanding how the business is performing and what to do next. It also includes security, because information remains one of the major assets that can keep companies afloat while others fall into financial ruin, and it has to be protected. For all the talk about innovation, companies will also need to maintain their investment in the infrastructure that basically keeps the lights on. You have to keep the lights on, at least until your bottom line shows it’s time to turn them off for good.

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Jim Love, Chief Content Officer, IT World Canada
Shane Schick
Shane Schick
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