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Spending on 'strategic' IT to continue

By Sol E. Solomon, ZDNet Asia on November 25, 2008

Summary

Businesses that cut back on IT budgets could end up with bigger bills, Gartner warns, adding firms are still investing on technology to give competitive edge.

Topics

analyst, asia-pacific, business process, cloud computing, gartner inc., hardware, storage, vice president, virtualization

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SINGAPORE--The uncertain economic climate has moved Asia's IT sector from bullishness to caution and affected discretionary IT spending, a Gartner analyst said, but added that companies will still continue to invest on key technologies.

In an effort to cut or delay discretionary spending, many companies would likely extend their hardware replacement cycles and hold back plans to upgrade applications, Matthew Boon, Gartner's managing vice president, said during a media briefing here Tuesday.

But the analyst warned that this could be end up counteractive, resulting instead in organizations facing higher expenditure. For example, Boon said, if businesses choose not to change storage equipment that are over three years old, the maintenance costs could be greater than the cost of acquiring new systems.

According to Chip Salyards, BMC Software's Asia-Pacific vice president, "overlooking IT" in this economic storm could be a "fatal flaw".

"Those who continue to invest in IT as a means to help them deliver superior services and enhance efficiency, will ultimately be better-positioned to grow their business in both the near- and long term," Salyards told ZDNet Asia in an e-mail interview.

Boon noted that Asian companies will retain their investments on essential IT that facilitates business process efficiency, cost reduction and competitive advantage.

"Strategic investments will be made on migration to technologies such as virtualization, software as a service (SaaS) and cloud computing, as companies keep a longer-term view of technology utilization," he said.

Companies will also continue investing on their critical infrastructure projects, he added.

The ongoing global economic problems recently prompted Gartner to revise its growth forecast for the IT market in 2009, from 5.8 percent down to 2.3 percent.

Boon offered some strategies for companies to manage IT during a downturn.

"Stop the 'bleeding' first. Decide what needs to be spent and not what needs to be cut. They should also modernize infrastructure with virtualization and cloud computing concepts," he said.

IT managers should question every project as if it was new and rank them, in order of importance, Boon added.

Anthony McMahon, Hewlett-Packard's Asia-Pacific and Japan vice president of software and solutions, concurred that prioritizing IT spend is a major initiative as it helps companies identify projects that have low value or are redundant, and which can be delayed or cancelled.

Salyards added that prioritizing projects help position a business for future growth and success when market conditions improve. It enables companies to make smart investment decisions that promote efficiency, reduce risk and lower costs, he said.

Boon added that companies must also be willing to be nimble and change quickly. "Look for technology that would help you change as business changes," Boon suggested.

To this end, McMahon said in an e-mail interview, companies need to look at automating change in their overall IT operations so as to proactively prevent and fix problems.

"With increased complexity of applications and services, and the already volatile economic environment, we need to look at lowering risk and drive efficiencies where the majority of the IT spend is: the overall operations," he said.

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