What Matters to the Business

 

Roger Kay, an analyst with Endpoint Technologies Associates, agreed that hardware purchasing, especially PCs, is the first area that IT managers tend to cut. After PCs, IT departments tend to look at how far they can stretch their budgets when it comes to other hardware pieces such as servers, networking equipment and storage arrays.

"When a corporate manager has low visibility on future revenues the easy thing to do is to throttle back on current expenditures and try to save cash against a rainy day," Kay said. "Hardware purchases can almost always be delayed because most companies already have something doing that job now. Companies can go with the existing solution and put off the new planned one more or less indefinitely. This can certainly go on for a quarter and maybe even longer than that."

In Kay's estimation, a business can hold off on upgrading to Microsoft Windows Vista from XP and save money by not buying newer PCs that have better but more expensive technologies, such as newer processors, chip sets and graphics cards, to support the new operating system. The company can still function, and this allows the IT manager to save money by delaying purchases by three to six months or even longer.

"The plan [to upgrade to Vista] is still in place, it just gets put in the deep freeze," said Kay.

With this current round of economic concerns, Keefe said there are no clear-cut answers for IT. Some of his organization's members, such as insurance companies, are preparing to spend money on IT, as they have already received new business after the financial failure at AIG-the world's largest insurance company. Other SIM members plan to invest in technology such as virtualization to consolidate servers and save money in the data center.

Still others are willing to put up with older networking gear and server systems even if it means there's a bottleneck in a company network's bandwidth in order to save some capital.

"For the most part, there might be some delays in some investments, but you have to look at what truly does matter to the business," Keefe said. "If it's a concern about cash flow, that inventory project you are working on is still going to go forward, but maybe you cut back on that next-generation CRM software or that sales force automation application."

Pam Taylor, president of SHARE, an IBM user group that represents over 2,000 organizations, said some of the group's members are also contemplating what do with spending as the crisis continues on Wall Street. For some, it could mean a return to past practices that included delaying spending on hardware, wringing more life out of existing hardware or postponing software upgrade projects.

However, there are some cost-saving measures that could be accelerated to help save money that could actually have some benefit beyond dollars and cents. Taylor referred to some of the efforts by her group's members to develop more green computing methods to save power and cooling costs.

"Many organizations were already starting to think about green computing and what their power consumption is and what those costs are associated with the continued disbursement of computing around their organization," Taylor said. "There could be a potentially interesting side effect that some of these cost-saving measures that were planned for the long term actually get accelerated as an alternative to all of the postponement that we see."