A Recession Is No Time to Cut Tech Spending

Ann All

I've blogged a couple of times over the past month about how to cope with a recession, sharing some good belt-tightening tips from CIOs and also a three-pronged strategy from The Hackett Group designed to help companies control their costs.


While the stagnant economy no doubt has many CIOs thinking about scaling back their tech investments, that's the wrong approach, writes Bob Suh, Accenture's chief technology strategist, in Computerworld.


Most of the growth in IT budgets this decade has been devoted to back-office financial systems, says Suh, so many customer-facing systems are in pretty sad shape. This is especially frustrating to customers who have become accustomed to the effortless technologies that power devices like the iPod and services like Google and Facebook.


Unlike the latter two services, just 22 percent of customer interactions, 19 percent of supplier interactions and 33 percent of employee interactions take place online, according to Accenture. Writes Suh:

The cost-based view has reduced the flame of innovation to mere embers inside the firewall.

Suh says there will be no further significant productivity gains without investments in newer technology. (Indeed, sharp folks like Andrew McAfee have been trying to determine why IT-fueled productivity improvements appear to have declined in recent years. Though aging systems surely aren't the only reason, it's safe to say they haven't helped.)


Another important reason for investing in IT is to maintain America's competitiveness in a global economy in which emerging economies like India and China are largely not as bound to legacy technology. Writes Suh:

It's like the difference between U.S. and Asian airlines. Sticking with older equipment may work in the short term, but it leaves us vulnerable to competitors willing to place fresh investments -- gaining higher productivity and more satisfied customers.

You're convinced, but you're not sure your CFO will be? If you wonder just how you're supposed to plead for more tech dollars in today's economy, Villanova business professor Steve Andriole shares some good advice on Datamation. Simply point out how tech investments can either save the company money or generate new revenue -- and be prepared to offer examples. Andriole cites several in the article, including thin clients, software-as-a-service and VoIP.


As long as you've got recession on the brain, you may find this internetnews.com article an interesting read. In it, IDC's VP of worldwide IT market helpfully illustrates that today's economy is stronger in several respects than the last big slowdown in 2001-2002. The current recession is due largely to overextended consumers rather than failing businesses. And there is no single catastrophic event akin to the Sept. 11, 2001, terrorist attacks.


So the current economic slowdown is not likely to affect businesses as strongly as the previous one. The IDC executive says that many CIOs are devising multiple budgets to cover a variety of spending scenarios and reviewing tech investments on a more frequent basis. Certainly sounds like smart advice.

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