Economic downturn creates rough ride for IT on spending

Caution signs come out on IT spending plans, as companies focus on reining in costs

Switching to the Microsoft service was attractive partly because it promised to deliver immediate financial benefits, Young said. He added that as far as other IT initiatives go, the school plans to proceed cautiously, watch what other universities do and see "what works and what doesn't work, what saves money and what doesn't."

Blair Mandryk, global IT manager at Haworth, a maker of office furniture, had been looking to cut his technology costs long before the recent economic events began unfolding. For instance, he reduced 450 physical servers down to 100 boxes through the use of VMware's virtualization software .

But nowadays, Mandryk said, IT managers also have to find ways to expand services to end users without necessarily being able to increase their tech budgets. "The business is still expecting IT to deliver, so without having the money to do it, you have to find creative ways," Mandryk said. He predicted that SaaS "is going to be a huge trend," partly as a result of the economic downturn. A year ago, Mandryk himself wouldn't have considered SaaS. Six months ago, "probably yes," he said -- and now, "absolutely."

Since many companies are likely to put off IT upgrades until the economy improves, another strategy for coping with the downturn is to get the most out of what you already own. Chris Mincay, an IT procurement manager at a grocery chain that he asked not be identified, said he's looking at ways to make better use of the applications that he himself relies on as part of his job. "Sometimes, applications are so sophisticated that you only use a certain percentage of [their capabilities]," he said.

Scotty Bryan, CIO of the Kentucky Higher Education Assistance Authority, said he's trying to trim IT costs wherever he can -- a process that began earlier this year when the tightening of credit markets put a crimp in the student loan business.

According to Bryan, the authority's IT department has been managing disks better to increase available storage capacity, getting rid of software modules that aren't being used and shifting users to electronic documents to cut down on paper consumption. Job vacancies in IT aren't being filled, and new purchases are being reviewed much more closely than before, he said.

Charles Everett, CIO of the Services Employees International Union, said he expects to be asked to help the union find ways to cut operating costs. SaaS is an option, Everett said, although he isn't sure that would cost less in the long term than continuing to run software in-house would. "I think [SaaS] is always going to be more pricy than doing it ourselves -- but we will see," he said. Everett also views increased IT automation as a potential cost-savings option.

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