The majority of South African CIOs say that now is the time for companies to invest in IT rather than freezing new purchases in an attempt to cut costs.
According to independent research conducted by Coleman Parkes on behalf of Intel, local CIOs believe that investing in new IT will provide the cost reduction that senior management seeks and that many are worried that it is too easy for senior management to freeze IT investment and extend the life of current systems in 2009.
Coleman Parkes says 73% of responding CIOs believe that now is time to invest in new IT and see the benefit of reducing costs. Offsetting IT purchases may seem to be prudent, but the reality is that the business pays more through increased system downtime, IT support costs and decreased end user productivity.
“Businesses are looking to reduce costs and are assessing IT spend," says Devan Naidoo, GM of sub-Saharan Africa at Intel. "This is understandable as we move through this economic downturn, however, cost-cutting for the sake of short-term intervention can be detrimental to the overall business. Instead, well-focused IT spending can actually drive down business costs and improve enterprise performance.”
The research says that 61% of CIOs see IT cutbacks to save money in the downturn as a false economy as much of IT spend consists of running costs rather than capital expenditure (CapEx). Constricting CapEx can actually lead to an increase in overall spend by shackling businesses to the extended use of older and less efficient technology. This reality is reflected in 2009 spending priorities such as consolidating the datacentre (50%), legacy modernisation (48%) and reducing power and cooling costs (47%).
Reflecting this, 73% of CIOs believe that further investment now is needed to deliver the level of savings required over the medium term. This can be explained by looking at the lower running costs of more modern technologies.
Naidoo cites the example of replacing a datacentre equipped with 184 four-year old single core servers with the latest Intel Xeon 5500 servers pays back the CapEx within eight months, and delivers cost savings thereafter.
"It will require just 21 servers to match the computing power," he says. "Floor space requirements are reduced by 89% and annual energy costs by 92%.
“This research highlights that CIOs want smarter, more secure IT solutions which reduce and simplify the burden of IT management," Naidoo says. "Intel’s innovative silicon technology enables new features that respond intelligently to these challenges. PCs and servers based on Intel technology provide breakthrough automation and capabilities for manageability, security, performance and energy efficiency.”