There is a school of thought that claims that CIOs saw the economic woe train coming down the track last fall and factored in the subprime, energy cost challenges into their 08 budgets. Plus, some believe CIOs learned a lesson from the scorch the earth budget cutbacks in the 2002 recession. This time around they are wisely segmenting their IT spend into discretionary and non-discretionary items. New data from IDC reports pcs, mobile handheld devices, operating system software, office productivity software purchases will be cut back if times get tighter in the coming month. But many companies, particularly very large firms who compete on the global stage, these firms generally now earn 55 to 60 percent of their revenues from outside the United States....many of which are economically still booming. While these firms, too, might forgo pc hardware and software upgrades, they will continue headstrong with IT projects deemed strategic and non discretionary. Ergo, a possible recession, if it comes (or maybe we are already in it)will have different impacts on different sectors of the IT industry.

Globalization should minimize overall impact of the sluggish US economy. Two things should keep most of the organizations healthy on their balance sheet at least for a while (except the heavy hitted organization sectors – Home and Financial sectors). First is the booming market in last couple of years allowed sufficient cash on balance sheets to survive next couple of slow quarters and the second is reaching beyond US customers in the global market.

However, organizations will be more cautious in spending and would definitely tighten-up the overall budget including IT budget. In this case, I think CIOs will monitor the overall IT spending and probably will cut in the following areas:

1. If not started yet, outsourcing will be the first consideration point
2. Upgrade to the latest software and operating systems (Microsoft Vista, Office 2007)
3. Upgrade to hardware/infrastructure
4. Provision of handheld devices to the employees
5. Economic Travelling
6. CRM Implementation
7. Cut number of Pizza slices per developers!

To survive in very competitive globalized market, CIOs will still continue focusing on the following areas:

1. IT Governance
2. Security
3. Streamline business processes to improve productivity
4. Concept of virtual organizations
5. Online market capabilities
6. Improve quality of the existing products
7. Training

Ashish Ghoda
http://www.technologyopinion.com