CIOs Under the Budgetary Gun
Who's Helping the Help Desk? As Budgets Tighten, IT Learns to Do More With Less
November 3, 2008
LAS VEGAS - As companies pare back their operational budgets and look for ways to trim costs, chief information officers are being challenged to make their IT departments do far more with much less.
"We are going to have some serious funding issues going forward in the technology space," said Misty Ford, director of Americas business technology for Russell Investments at the National Investment Company Service Association's 2008 Technology Summit.
"In today's world, you never get caught up; you just get quick wins along the way," Ford said.
Businesses are increasingly relying on information technology for improvements in efficiency, communication and automation, but a global recession has forced companies to make reductions in IT staff and systems.
"We're all going to be doing more with less," said Frank Coates, CEO and president of Coates Analytics, a PNC company.
"How many of us have big projects that we're working on and are wondering if they're going to get killed?" he asked.
Whatever the IT specs are right now, realistic managers should expect that to be cut in half, he said. Most of the available funding will go to ideas and projects that drive revenue.
"There's really no budget for IT," said John Shea, vice president and chief information officer at Eaton Vance, noting that IT departments have been stretched thin for years. "Everybody wants everything now. IT has been barely able to keep up with demand as it is."
Some key challenges for technology executives at fund companies will be to reduce the complexity of software programs and networks, replace aging technologies, accelerate productivity and help to position their companies to be competitive over the next decade, said Rebecca Jacoby, senior vice president and chief information officer at Cisco Systems.
"There is a huge opportunity for IT to lead our business through a very difficult period," she said. "Technology is an enabler of our business strategy. We are seeing a blurring of technology and business value."
Moore's Law says that due to technological advances, the cost of producing electronics drops roughly 50% every two years.
In order to keep selling products at the same price every year, electronics manufacturers and financial firms have been continually adding extra features, whether they are needed or not, said Nick Negroponte, cofounder of the Massachusetts Institute of Technology MediaLab and founder of the nonprofit program One Laptop per Child.
The result is what Negroponte calls "featuritis," or feature creep: the addition of unnecessary features that slow performance and result in over-complication instead of sleek, efficient design.
"Featuritis is keeping technology from developing," he said. "Laptops today are slower than they were five years ago."
The consequence of making all these incremental improvements is a technology infrastructure that is obese, he said.
"Customization becomes expensive, and eventually you can't sustain it," Ford said.
Many businesses looking to trim some fat can start with reducing the bloated, unnecessary features in their product line, in their IT shops and in other areas.
"You need to know who your customers are," said Peter Travers, principal of Eagle Global Professional Services at Eagle Investment Systems LLC. "Avoid the 'just give me everything' trap. You don't want everything; you want something meaningful, not a garbage can full of data that's not usable."
Out With the Old
Even with a potential freeze or reduction in IT budgets, firms will still have to consider replacing old, obsolete systems. It may be safe to skip a cycle of upgrades while times are tough, but technology is evolving so quickly that falling behind for more than a few years can lead to serious business ramifications, including incompatible software, increasing inefficiencies, poor employee morale and costly maintenance.
CIOs agree that a gradual approach is the most efficient way to cycle out old programs and computers, rather than a sudden, major upgrade.
"I'm going to double down on decommissioning our legacy programs," Jacoby said, adding that if technology isn't cared for properly, it will impact everything else.
Three key trends in today's business environment are globalization, virtualization and collaborative technologies, she said. Replacing aging technology is a crucial step in positioning a company for the future.
At some point, consumer demand begins to drive business operations. Employees are using social networking, blogs, instant messaging and wikis in their private lives and want to use them for work as well. IT departments are concerned about the spread of non-approved methods for logistical and security reasons, and wonder if they should keep trying to stop employees from using them, Jacoby said.
"An iPhone is not the best tool, but that won't stop workers from using iPhones," she said. "We have 6,000 employees using iPhones today, whether I let them or not."
Jacoby said IT departments will have to change their focus from building systems to sharing systems. If employees insist on using technology like iPhones for work, they are going to need tech support, and their company's IT department should be providing it, she said.
IT departments also have to be prepared for Millennials, the massive generation of young workers in their teens and 20s who were raised on the Internet and expect to be able to use the latest technology at work and at home.
Millennials, also called Generation Y, are larger than the Baby Boomer generation and will be a driving force in the coming years. They are used to collaboration technologies like wikis and blogs and typically have no loyalty to a company, often switching jobs frequently.
"The workplace will have to be prepared for these kids," Shea said. "We'll have to learn how to manage differently. We're not going to have them in for the long haul."
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