Gartner Advises Asia Pacific CIOs To Plan For Growth

Don’t wait for signs of a return to growth to begin planning for business growth, advised Gartner analysts at the Gartner Symposium/ITxpo currently being held in Sydney. Peter Sondergaard, senior vice president and global head of research at Gartner said that an economic downturn can be a perfect time to undertake projects that warrant priority, because of their impact on future growth.

Releasing preliminary results of its annual Gartner Executive Programmes (EXP) CIO survey, Gartner said IT leaders are wary of making dramatic budget cuts because they know it will be difficult to ‘ramp up’ their IT capabilities when opportunities for business growth return.

Of the 444 CIOs surveyed around the world thus far, 48 percent are projecting an IT budget increase in 2009. However, 52 percent of CIOs are reporting flat or IT budget decreases in 2009. On a weighted basis and considering all 444 IT organisations, 2009 IT budgets are set to increase 3.36 percent.

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“While these are preliminary results, they support what we have observed during 2008 — that enterprises see IT as a way to drive cost out of the business in the face of an increasingly challenging economic climate,” said Sondergaard.

“Unlike the post-dot.com era — where IT was perceived as wasteful — organisations now view IT as a way to transform their businesses and adopt leaner operating models. While it is prudent to plan for a short-term economic slowdown, IT leaders that are called on to reduce 2009 IT spending should do so in a way that will not impede the organisation in the future,” he said.

As business growth is not declining at the same rate across geographies, Gartner said that CIOs can exploit asymmetries between regions and industries to find new opportunities.

“This is a great opportunity for businesses located in Asia Pacific. During 2009, some countries and regions are still expected to grow at fairly robust rates,” said Sondergaard. “Divert resources to those regions of your global business where your regional offices, customers and suppliers are growing so fast that they are probably asking ‘recession… what recession?’”

Asymmetry of markets and regions is a continuing feature of the global economy and IT leaders must be aware that more than one style of response may be needed if the enterprise is active in regions or sectors with different conditions.

Gartner said economic uncertainty dictates that prudent IT organisations prepare three alternative budgets: best-case, worst-case and most-likely scenarios. To that end, Gartner presents three global 2009 IT budget scenarios, spread across all industries, and based on the fallout from the ensuing economic uncertainty.

In a best-case scenario, Gartner predicts that global IT budget growth will be between flat (0.0 percent) and 3.3 percent; in a worst-case scenario, global IT budgets will stay between flat (0.0 percent) and a decline of 2.5 percent; and in a most-likely scenario, global IT budgets will fluctuate between flat (0.0 percent) and an increase of 3.0 percent.

According to Sondergaard, this overall decline in IT budgets is primarily due to the financial services sector, as a huge spender on IT, dragging down the average substantially. Public sector budget cuts are also occurring across many economies, and there is weakness in other vulnerable sectors such as retail and automotive.

Sondergaard highlighted eight areas that IT executives should focus on right now to help their organisations weather economic turmoil. These include cost optimisation, virtualisation, IT modernisation, low-carbon IT, workforce management, business intelligence, service-oriented architecture (SOA) and business process management (BPM), and multi-sourcing.