9 Ways IT will be Impacted by the Current Economic Turbulence

1. Accounting for inflation, IT budgets will be flat to declining, especially in select industries such as Financial Services, Real Estate, Construction, Luxury Goods etc., which in turn will cause increasing cost-reduction mandates
2. Corporations will reevaluate all services contracts in an attempt to consolidate or renegotiate
3. Discretionary spending (e.g., large enterprise software purchases, consulting, systems integration and some application development) will suffer the biggest blow
4. General layoffs and downsizing will become more prevalent as internal IT groups are forced to rebalance resources with any shrinkages in the overall business
5. Areas including application/supplier rationalization and infrastructure consolidation, as well as necessities such as IT security, will fare better
6. "Green" initiatives will move forward if they can demonstrate real, relatively short-term operational cost savings
7. IT groups that neglect to aggressively and innovatively demonstrate their value as a corporate asset – e.g., how IT investments can save money, increase efficiency or pick up reduced workforce slack throughout the enterprise – run the risk of being viewed as a cost center rather than a value-add to the business
8. Outsourcing that reduces fixed overhead – such as people, applications and physical infrastructure – will be in favor, but only if there’s a realistic business case and short-term ROI
9. Outsourcing that enables cost avoidance (e.g., leveraging a third-party provider’s new hardware or enterprise software investments) will be more likely to garner support

About the Author

Peter Iannone is Executive Director, Information Technology Advisory Services for EquaTerra, a leading sourcing advisor. www.equaterra.com