Turmoil in credit markets around the world and a continued uncertainly around the future economic climate means that companies need to plan for all eventualities – and CIOs are advised to create two IT budgets for 2008.
According to Garners, the first should reflect the guidance already provided by senior decision-makers but this should be supplemented by a second "back-up" budget that assumes the need to cut costs in response to the arrival of a business slowdown.
"Although the financial outlook for 2008 remains far from certain, waiting for a clear economic trend to appear prior to taking action is not a prudent option," says Ken McGee, vice-president and Gartner fellow. "There is already sufficient concern about the possibility of a business slowdown for next year from enough credible and independent sources to suggest that preparing a backup cost-cutting IT budget now is just plain good management."
According to Gartner, CIOs need to have a "recession budget" and business plan ready for immediate implementation long before being asked to reduce costs. To be meaningful, Gartner recommends that such plans should target a decrease in IT spending of at least 10% below the highest annualised IT spending run rate levels attained in 2007.
CIOs and IT managers who play their part in preserving as much enterprise profitability as possible will benefit the wider organisation, McGee says.
"Creating a responsible alternative recession IT budget now will demonstrate the type of innovative and forward thinking that senior executives expect to see from
their staff. It will also show the kind of flexibility and agility needed to respond to fast-changing economic and business conditions."
McGee says that, rather than viewing the possibility of a significant business slowdown or recession with trepidation, organisations should use it as an opportunity to create a solution that will enable the enterprise to react with speed and certainty if the worst economic concerns come to pass.