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If We're Entering a Recession, Preparedness is Key

If We're Entering a Recession, Preparedness is Key

Preparing for a fight

Lets Talk Figures

At a stretch, both Gomolski and Roberts might argue that this means the opportunities for cost-cutting in IT are limited. In particular, Gomolski suggests that the first calendar quarter data on corporate IT spend is "not as gloomy as it could be, given the economic situation".

She adds, "Some people were expecting five per cent or 10 per cent cuts in IT budgets, like last time. But budgets do seem to be holding up rather well."

The unspoken caveat in Gomolski's statement involves the words "so far".

Since last year, both Forrester and Gartner have cut their forecasts for growth in global IT spend several times. Both organisations still forecast overall growth, but no one believes that we've seen the last of those downward revisions.

The financial results generated by the big technology suppliers suggest a complex picture. Last November, Cisco caused a stir by suggesting that tech expenditure could get "lumpy". Then, in March, HP reported surprisingly good results but Oracle's earnings suggested that business applications licence sales had stalled in North America. In mid-April, IBM disclosed that its Q1 revenues rose by 11 per cent at year-end.

Gartner's Gomolski remarks, "CIOs aren't saying: 'Chile's GDP just went down, we must adjust our budget'. The overall health of the firm tends to dominate decision-making."

By the time the earnings season ends in early May, you can expect sentiment about the US economy - and therefore sentiment about IT expenditure to be a good deal worse than it is now. In the UK, Gartner's view is that IT budget growth rates are actually increasing in Europe. In the fourth quarter of 2007, European IT budgets were pegged at 3.2 per cent. During the first quarter of 2008, Gartner's forecast increased to 3.9 per cent.

Europe's current expansionary phase is presumably heavily reliant on Eastern European growth and the relative resilience, so far, of the Eurozone. That said, researchers from Citigroup have separately suggested the time lag between deterioration in credit terms and a slowdown in industrial activity stands at around nine months. On this basis, after months of bad headlines, the UK's very own downturn is probably starting in earnest right about now.

Strategise

So if the worst comes to the worst, what should be done? We asked Barbara Gomolski of Gartner; Richard Sykes, former IT vice president of ICI; David Roberts of The Corporate IT Forum; and Brinley Platts of CIO Development for their views on recessionary best practice.

Our panel recommended eight basic strategies. In terms of broad themes, the degree of overlap between their recommendations was striking.

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