Silver Linings and dark clouds of the current tight IT budget climate

Silverlining Last week I was at a dinner with IT execs from several firms.  Not surprisingly, we talked about the economy and what it means for their firms and for their IT organizations.  I asked them what the economic pressures meant to them, and they said “their business customers realize now that what they ask for has a cost”.  One PMO head said that her business partners used to ask for ‘the quickest solution regardless of cost’, and now they are asking ‘the best value solution’.  Others echoed this, saying that IT used to be looked at as a ‘magic cookie jar’ which should always have the resources a business area needed – but now business managers understand IT’s finite resources and the need for prioritization.

This is in line with the response to another survey question we asked recently:  when asked “How has the current economic uncertainty and the challenge it poses for your firm affected your relationship with business management?” – 38% of respondents (20 of 52) said it had improved the relationship and 46% (24 of 52) said their relationship had not been affected.  As another CIO said in a recent conversation ‘the need to cut projects has made business execs finally understand their role in IT governance’.

That business understands the tradeoffs and is being engaged with IT is a great silver lining – but unfortunately, behind every silver lining there is a dark cloud.  The dark cloud I worry about is this: 

  • CIO works well with business execs to make cuts in the firm’s IT budget.  CIO and business execs see they are on the same side of a common challenge
  • Business management – the next level down – get frustrated.  They need IT to make their goals, but IT can deliver even less than it could before.  CIO might not even notice this, since he has a good understanding with his peers.
  • Business relationship with IT suffers because maintaining and improving this relationship isn’t a priority.
  • Upturn comes.  Business wants to spend more.  ‘Tech Populism’ (technologies designed for consumers being brought into business settings)+ Software as a Service means they have more options.  IT is still in cost-containment mode. 
  • Business execs who were the CIO’s buddies now side with their own managers.  IT is not viewed as responsive, and CIO is thought of as “great when there is a down-turn, but not forward-looking enough to support business growth”
  • We can guess what happens next….

OK, I look for dark clouds.  But Forrester does have data that shows the business exec suite is much more content then business managers1-2 levels down.  This scenario is something all CIOs should be thinking about - and I know some are.  These CIOs are thinking about what is a lasting value proposition, and what they need to do now to begin to re-align their organizations to this value proposition – by changing the structure of IT, embedding more in business, and changing the skills they bring.

What do you think?  Do you see the silver lining or the dark cloud?  What changes do you see IT should make?   

Comments

re: Silver Linings and dark clouds of the current tight IT budg

Funny to see a tweet on this blog post while sitting in a Forrester EA Forum presentation on cloud computing. "Life isn't about waiting for the storm to pass, it's about learning how to dance in the rain." Time for a business-IT tango?

re: Silver Linings and dark clouds of the current tight IT budg

Though I do agree to some extent on the positivity of the prevailing challenging situations, I still feel the measures (like cost cutting) to cater to turbulent circumstances, are done independently in both Business as well IT organization.Organizations have been asked to cut costs, which ideally should be realized to get back to basics, including the aspect of really understanding the business & realigning accordingly. Rather, I see, IT and Business doing the cost cuts as a standalone and independent exercise thus aggravating the current situation.