Bucking the budget cut trend during the downturn

Not all IT organizations respond to a recession in the same way, according to Forrester Research, which conducted a survey that revealed some companies continue to invest in technology to meet business demands.

In its June 2009 report “Innovation and Agility – Driving IT Success in Economic Hard Times,” Forrester Research revealed the results of a survey of 46 enterprise IT decision-makers that shows three primary reactions to the recession. While many organizations cut budgets to ride out the economic downturn, Forrester found that not all companies resort to a bunker mentality.

“Across all of these companies, traditional approaches to budget cuts abound – like postponing upgrades, terminating long-running projects or reducing travel and entertainment,” the report reads. “But some firms aren’t hiding out, waiting for the recession to pass. Instead, they are investing in agility to keep their options open, or they are investing in business innovation to help them accelerate out of the recession.”

Of the companies surveyed by Forrester, 22% had not yet taken any action due to the downturn, keeping IT budgets flat or even growing their spend. Thirty percent of these respondents are focused on major change initiatives and the remaining 70% are driven by ongoing business demands. About one-fourth of those surveyed have “active plans” in place if budget cuts become necessary. Forrester reports that a “large portion of this group had previously reduced budgets and are anticipating additional reductions.” And the third group the research firm identified were IT departments actively cutting budgets today. More than half of the respondents fell into this category, but Forrester focused on the 22% bucking the trend and focusing on innovation.

“These firms are investing to improve their ability to shift partners, customers and markets rapidly to optimize their performance during the recession and to prepare to respond quickly to emerging opportunities,” the report reads. “Companies with a sustainable innovation process are looking for new business models, product/service offerings or operational improvements as the foundation for growing through and out of the downturn.”

Network World wants to hear from you. Are you ready for the recession to end? Which projects is a priority for your IT organization now? What is garnering the most budget dollars and staff hours? How is your company working to ensure it maintains a competitive advantage during and after the downturn? Please share your thoughts with me at ddubie@nww.com.

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Denise Dubie is senior editor with Network World.