IT Executives and Difficult Economic Times

The March/April 2012 issue of IT Pro included an interesting survey of IT executives and managers from the US, UK and India, aiming to understand how they respond to turbulent economic times and whether their responses differ based on the company’s standing in terms of sales.

Those surveyed fell into three categories concerning their perception of sales in the 12 months prior to the survey: stable (23%), deteriorating (48%) and increasing (29%).

Some of the survey’s interesting takeaways follow, broken down by the various strategies used by executives.

Cost Reduction:

  • There was a net reduction in IT staff of 5%; the largest reductions came from those companies with deteriorating sales. There was also a net reduction in IT consulting, IT education and training, IT technical support and software licensing costs.
  • Expenditures on IT service levels displayed a modest increase.

Outsourcing:

  • 27% of IT executives have outsourced business processes or are planning to do so, 33% have outsourced system support and 37% have outsourced system development activities.
  • The data suggests that companies with deteriorating or stable sales take steps for immediate savings, rather than steps for long-term savings, like outsourcing.

Alternate Computing Resources:

  • 80% of respondents use/are expected to use in-house virtualization technologies, 41% use open source solutions, 36% use cloud computing and 33% use on-demand or utility computing.
  • On-demand and cloud computing could offer cost advantages over traditional approaches; however, more U.S. companies stick with in-house server virtualization (over 70%) and open source software (around 40%).

IT Management:

  • Cost sharing does not appear to be a widespread practice. 33% of respondents have instituted cost-sharing arrangements with vendors, customers or partners. In the U.S. specifically, less than 25% of IT executives pursue cost-sharing arrangements.
  • Two-thirds of IT executives in the US have a comprehensive IT plan that they review periodically; however, executives need to adapt to new conditions quickly, rather than adhering to their initial plan.

IT Business Drivers:

  • 80% of IT executives are focusing on projects that will bring reductions in business costs and improvements in business efficiencies – this suggests an emphasis on producing business savings with IT.
  • 68% of U.S. IT executives claim that IT investment projects have enabled revenue generation, suggesting that executives are targeting IT projects that will specifically enable sales growth.

Business Intelligence:

  • IT executives rely heavily (80%) on internal data sources – less so on syndicated content (36%) and user-generated content (33%).
  • In the U.S., in terms of business intelligence, syndicated content is positively correlated with IT-enabled reductions in business costs, improvements in business efficiency and increases in sales via new IT-based business models.

The survey also found that 64% of executives expect sales to stay the same or get worse – not a bright outlook. To that end, the survey’s findings reveal three key strategies that executives should be utilizing to their benefit: reducing operating costs, adopting new computing approaches and pursuing IT projects that enable top-line growth.

The full article, “Coping Strategies for Turbulent Times: A Survey of IT Executives,” is not available online, but you can purchase it here.

Do these survey results fall in line with how your company deals with economic changes? What are your strategies for success?


Mike Harris
DCG President

Written by Michael D. Harris at 09:00
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