“IT budgets have not yet been cut as a result of what’s happened on Wall
Street, but business leaders expect cuts are coming,” said Andy Woyzbun, lead
analyst with Info-Tech Research Group. “Info-Tech has more than 23,000 clients
who are primarily IT leaders from medium-range enterprises, and they are
increasingly commenting on the likelihood of cutbacks.”

When asked if they expect the economic situation to result in IT budget
cuts, respondents said:

– very likely (32.6%)

– probably (20.7%)

– possibly (20%)

– unlikely (23%)

– don’t know (3.7%)

Despite seeing the gathering storm, most enterprises have not taken
pre-emptive action, something Woyzbun cautions may be an overly optimistic
approach. Info-Tech has put in place tools and templates designed to help
clients mitigate the impact of the economic downturn, something that should be
a priority now, Woyzbun added. (A free overview from the “Opportunities &;
Challenges in IT Cost Reduction” report is available at www.infotech.com).

“Decisive action by IT decision-makers will contribute to the long-term
sustainability of their companies, not detract from it,” Woyzbun said. “From
re-prioritizing corporate expenses to re-negotiating existing vendor and
outsourcing contracts, tech companies that act now will be better prepared to
weather economic challenges than if they take a ‘wait and see’ approach.”

An Info-Tech Research Group study conducted during the summer showed that
when enterprise IT departments have to cut over five per cent of their budget
quickly, they’re most likely to cut contract and full-time staff and trim
salaries, plus eliminate training, development and team-building activities,
actions which can negatively affect morale and performance. With more advance
planning, companies can reduce costs through vendor management and contract
renegotiation with less inherent risk.

“Clearly business and IT managers will be looking to achieve the most
gain with the least pain if they are faced with budget cuts and since
last-minute decisions usually translate into headcount reductions and project
cancellations, it’s better to make strategic plans now,” Woyzbun concluded.