The economic times are uncertain these days -- what with the mortgage crisis and the big swings in the stock market. CIOs or IT managers can do their part to scale down IT costs in these tough times.
The financial page is no fun to read these days for anyone. The 2008 housing market forecast is grim warning of an even longer slump than first predicted, with double digit drops in real estate prices anticipated in many areas of the country. Oil is trading above $90 a barrel, which a few years ago would have been considered apocalyptic for the economy. The Federal Reserve is shoring up a nervous banking industry’s shaky credit market. And 2007 was definitely the year of the Bear for stock markets, leaving lots of unhappy investors with battered portfolios.
What happens on Wall Street, unfortunately, doesn’t stay on Wall Street. The year 2008 could easily turn Main Street into Pain Street. This means businesses of all size -- especially smaller, younger businesses -- could soon find themselves looking to downsize their spending fast for survival. If and when that happens, every area of the business will be under scrutiny for cost-cutting and proving its return on investment (ROI).
Why IT is a target
Because IT is typically one of the biggest chunks of the operating budget, it’s also one of the biggest and most obvious targets when it comes time to get lean and mean for hard times.
“IT spending is highly dependent on economic conditions. Our survey data indicates that IT executives have already scaled back their expectations for IT spending increases in 2008,” says Frank Scavo, president of Computer Economics based in Irvine, Calif.
Another attraction to slashing the technology budget: most IT departments don’t have their own revenue streams to bolster. Typically they don’t make money; they save money. This is actually more valuable to a company’s bottom line. Companies pay taxes on money they make, but not on the money they save. That $100,000 in new revenue may net only $70,000, for example. Saving $100,000 means $100,000 less taken away from the company coffers.
Where to start
That being said, here are some tips to save by cutting back IT expenses:
What not to cut
For business owners who may end up needing to quickly cut back their IT spending this year, it would be wise to do so with a scalpel and not a chainsaw. There are some technology expenses that are definitely expendable, but IT has its sacred cows. Slaughtering those areas could mean slaughtering the business itself. Here are some areas to protect from the bean counters: