IT Spend To Take A Hit In 2012, Say CIOs

According to Gartner, enterprises will continue to invest in IT in 2012 despite prevailing global economic challenges. In fact, Gartner predicts IT spending in India to total $79.8 billion in 2012, a 9.1 percent increase from 2011 spending of $73.1 billion.

It is heartening news, provided the prediction comes true. However, CIOs – the actual IT spenders – refuse to be enthused and share the same optimism. If the last year and the year before that has taught CIOs anything, then it is to be cautious, tighten purse strings and to do a lot more with less money.

“The year 2012 appears to be tougher. The world, especially India, is more likely to go through tough times at least during first 6-9 months of the year. This will certainly have an impact on IT,” says Satish Pendse, CEO, Highbar Technologies.

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Arun Gupta, Group CTO, Shoppers Stop opines that the top management is not likely to loosen its purse strings for IT spending in 2012. He definitely does not see it happening in the first half of the year at least. “If the situation at all improves, it will be only in the second half of 2012.” He further explains that the economic scenario will get worse before it gets better.

During tough business times, IT investments tend to get a lower priority since the focus is more on conserving finances for the core business investments. One may see more of wait-and-watch approach with regard to major IT investments.

For Anoop Handa, EVP and CIO, Fullerton India the IT spend will differ from industry to industry. For example, the BFSI vertical cannot ignore the crisis in Europe which will invariably make the top management restrict spending.

Tough Times Call For Tougher Measures

IT will be under pressure and will be required to find alternative solutions. Wherever license costs are high, CIOs will have to find options to reduce the license costs and look for add-on solutions.

Further, the IT leadership will be increasingly questioned for RoI before getting approvals. The pressure on them to reduce costs will also be high, feels Pendse.

Play Smart

The key will be to play smart. Some of the ‘smarter’ organisations that are cash-rich will tend to use this time to their advantage as the IT services providers will be ready to offer better pricing during the times when IT investments reduce.

“Smart IT leaders will use this time to get best bargains for their IT investments and use this relatively lean time for setting up world-class systems and processes using IT. This will enable their companies to be the winners when the economy recovers,” concludes Pendse.

Further, tougher economic scenario and especially drying-up of liquidity in the system will make the cloud-based model even more attractive. Smart organisations will want to avoid huge capital investment in the current economic situation and resort to the pay-per-use model.