IT faces changes from economic pressures

IT managers are standing tall in the face of economic turbulence, according to a new survey but they should get ready for flat budgets and financing changes.

The poll of 200 IT managers showed that 68 per cent expected their firm's tech strategy to remain unchanged and 24 per cent expected to be more "aggressive" of course, the research was conducted in August, before the worst of the banking troubles hit.

The North and Scotland were the most aggressive, at 32 per cent, compared to just 20 per cent for the South, possibly because of the affects of the economic meltdown on the financial sector in London.

But it's not just different sectors causing diverging reactions, said Charles Ward, the chief operating officer of IT body Intellect, at a roundtable event discussing the Getronics-sponsored study results. "Tough times cause people to think very differently... for a lot of people in IT functions, this is very good news," he suggested. "This could bring forward more interesting transformational projects."

While IT managers may be feeling a bit more pessimistic following the financial events of the past month, most don't expect cuts before the end of the year, Ward noted.

He said that next year is what people are worried about, adding most analysts he's spoken with lately have suggested growth in the sector will be flat in 2009.

It's not all doom and gloom, however, especially for larger firms in the right sector. "Larger firms... certainly seem to be better insulated," Ward explained, saying they have longer cycles with their clients and tend to think longer term. "Medium size or smaller companies are often less so, often because they're being subcontracted to."

On the vendor side, IT firms supplying to investment firms should be wary, but those which offer maintenance type services to manufacturing, utilities and the public sector will be less affected. Ward advised SMBs to avoid "dead markets" like travel, estate agents and hospitality, as they were likely to suffering more than others.

Ward also predicted consolidation across the sector. "Well-run companies with cash will be eyeing up less well-run companies."

The economic pressure could also lead to new ways of looking at financing IT, including utility or pay-as-you-go models, the roundtable attendees suggested. While this means IT suppliers take on more risk, it allows end-user firms to invest in IT without paying huge sums up front very appealing when budgets are being slashed and the books need to balance.

"If you can enable customers to be only paying for what they use, arguably it is recession-proof," said Ward. "Use less, pay less."

Also according to the research, the highest rated IT priorities were security, business continuity, and customer service. Intriguingly, reducing IT costs and keeping it green were the lowest ranked. "The green side is a tick needed to be done, but not an IT driver," suggested Mike Whitchurch, director of professional services for Getronics, which sponsored the survey.