Learning the art of leverage

Written by Pinakiranjan Mishra | Updated: May 8 2009, 04:54am hrs
IT spend
The meltdown presents chief information officers (CIO) with opportunities to improve their IT footprint and effectiveness. As organisations gear up for the future, the top management looks upon CIOs to cut operational costs and raise organisational effectiveness through better IT systems. Still, CIOs will have to work within the organisational constraints to achieve the goals.

The year 2009-10 will be a phase of leveraging existing IT environment and mapping selective investments. CIOs will largely work towards maximising their existing IT infrastructure. Any service or technology that helps cut costs or enhance business operations will be a winner. IT application companies must focus on modular and cost-effective solutions that go beyond capturing transactional data.

Not surprisingly though, given the recent security environment, physical security has become a key focus area. FY10 is clearly the year of maximising the return on investment and the trend is towards must-have initiatives rather than good to have ones.

In a recent survey of 123 CIOs, conducted by Ernst & Young and CIO Klub, it was found that the top five priorities of CIOs for 2009-10 will be IT cost reduction, information & physical security, business continuity planning/disaster recovery planning, implementation of advanced enterprise applications (CRM/BI/DW) and IT consolidation.

IT cost reduction will be the prime agenda of CIOs, with almost half of them indicating that as their priority No 1. But a preference for IT cost reduction will not necessarily translate into an overall investment reduction. Technologies that lower cost and/or improve operational efficiency shall remain favourites with CIOs, though technology selection could see stricter evaluation and a cautious approach.

One initiative that CIOs almost unanimously favoured was raising investment in physical security products, such as access control devices and smart cards. Various unfavourable events across the nation and the world have changed the security paradigm for companies. CIOs have to play a crucial role in deploying technology that manages security risks.

Information security and business continuity planning/disaster recovery planning are among the top three priorities after IT cost reduction. Most organisations favoured a focus on security and continuity this year and the trend was applicable for all types of organisationsearlier only larg organisations were focused on such issues.

Indian companies will continue to invest in traditional enterprise applications that improve their decision making abilities and help them understand their customers better. Advanced enterprise solutions like CRM/

Business Intelligence/Data Warehousing will remain a priority area for both small and large companies. However, the survey results also indicate that investment will be focused on information-intensive systems rather than transactional-focused (ERP) systems.

IT vendors should take heart that despite the slowdown, CIOs will not be averse to investment in new technologies if it adds value at a reasonable cost. An overwhelming 97% of respondents will have a budget for new IT initiatives this year. IT virtualisation, consolidation and green IT (Green Data Centre) are the top three technologies planned for the financial year 2009-10.

Outsourcing has always been seen as an initiative to reduce costs, and as expected, CIOs will not be averse to outsourcing. The indication is that CIOs see value in outsourcing and will be keen to outsource functions like facilities management, help desk and call centre.

The verdict is, even amidst global pessimism, Indian CIOs are optimistic and will continue to invest in IT in 2009-10, although selectively and with shifted priorities; focusing on cost reduction, IT enablement to improve the bottom line and security, and investing in product suites that will give the most bang for the buck.

The writer is partner, Ernst & Young. These are his personal views