How to Spend (and Not Bust) Your 2008 IT Budget

With IT budgets remaining essentially flat for 2008 and uncertain economic times ahead, it's more important than ever not to overspend on IT.

With IT budgets remaining essentially flat for 2008 and uncertain economic times ahead, its more important than ever to make sure you dont overspend on IT.

The situation is so uncertain, in fact, that Gartner recommends preparing two IT budgets for 2008. While the first would assume modest budget growth, the second would assume a business downturn, and should be about 10 percent less than the first budget.

Ray Wang, a principal analyst at Forrester Research, said economic uncertainty should change the way people think about IT budgets and projects. During economic upturns, for example, the business driver for projects tends to focus on top-line growth and strategic investments. But given the pending downturn and increasing regulatory pressure, Wang says companies should expect projects to focus on operational efficiency and compliance.

"Expect commoditized processes to be BPOd, varying instances to be consolidated, and standardization on middleware platforms," he said. In addition, companies should prepare to invest in compliance, analytics, and master data management while undertaking more collaborative-type projects with suppliers, customers, and partners in an attempt to increase efficiency, he noted.

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Given the markets uncertainty, its especially important to scrutinize your upcoming expenses and get your priorities in order quickly, said Anne McFarland, director of data strategies and information solutions for the Clipper Group.

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That means focusing on the overall organizational effectiveness of the business and investing in technology to furthers that effectiveness.

"Develop a prioritized list of what is needed to make your organization work better, in business terms, before you talk to vendors about what they want to sell you," she said. "If you get your house in order, your business will be in a position to avoid the ill-guided initiatives that drain budgets dry and empty promises that drive customers and partners to look elsewhere."

One of the most important, economically friendly and efficient ways of managing scarce IT dollars, especially for smaller businesses, is turning to third-party application deployment, IT service, and maintenance. Using these options means less technical knowledge needed in-house (possibly reducing the headcount), and faster service.

Click here to read about the best money-saving technologies for 2008.

One of the most prevalent third-party options, SAAS (software as a service), will continue to grow in popularity. During the year, vendors will improve the model, adopting variants of multi-tenant SAAS, multi-instance software virtualization and on-demand hosting. At the same time, competition will spur vendors to improve pricing models, causing the entire model to become even more competitive and cost-effective, Wang predicts.

When evaluating how a third party might help maximize your IT dollars, dont discount third-party software maintenance vendors. Its a growing trend, despite competitive pressures from large vendors to stymie third-party maintenance vendors, Wang said.

Other tips include:

• Understand your companys operations plans.
  
• Aggregate purchases by partnering with other companies for group buys or buying in quantity. But given economic uncertainties, its best to keep bulk or group buys on the spare side.
  
• Choose products you know will work together, either because they come from the same company or come from vendors whose products have a history of working well together.

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