Enterprise IT: Ready for a bumpy ride

Enterprise IT executives are taking the economy's downturn in stride. This not being their first time at the rodeo, they know how to take the bull by the horns.

Read more on how enterprise IT executives have prioritized spending for the year
See results of our reader survey on IT spending and budgets

High-tech leaders looking out over the year anticipate tightened budgets, greater demands on limited staff and tough negotiations with business managers about which needs technology can meet during this financial crisis. (Read analysis of our budget survey.) What they don't anticipate is a repeat of their experiences during the industry collapse of 2001, when IT executives took backseats while CEOs decided the direction of their corporations' technology use.

"The last time IT experienced this type of economy, the budget cuts were more punitive in light of high-tech seeing double-digit growth for years," says Robert Whiteley, a principal analyst at Forrester Research. "IT basically gutted itself and, from a skills and alignment perspective, has been paying for it ever since. Now IT is going to be smart in the cuts and offload noncore functions, while maintaining necessary resources."

That's why many IT executives view today's economic uncertainty more as an opportunity to stretch their muscle, and less as an uncontrollable force. Some say they even feel empowered to guide business leaders via strategic technology decisions that improve the bottom line.

Many IT leaders, for example, are investing in software-as-a-service (SaaS) - which involves providers delivering applications via a hosted, subscription-based model - to bring killer applications in-house without breaking the bank. They're changing service levels to require less immediate help desk responses for calls that aren't business-critical. And some are rolling the dice and cutting back investments in disaster recovery to facilitate increased mobility for workers.

The point is, IT executives can lead the charge to optimize services with less money.

"One should never turn down the opportunity to exploit a crisis, and IT organizations are more willing today to take a risk to get a benefit," says Peter Whatnell, CIO at Sunoco and president-elect for the Society for Information Management.

Where's the budget?

IT budgets indeed have shrunk for 2009: In a survey of Network World readers, roughly one-third of 123 respondents said they intend to keep IT spending at 2008 levels, and another 43% said they will spend less (see "IT budget '09: Spending down and contingencies at the ready"). IT organizations face a lean, challenging year of providing more services with fewer resources.

With shriveling IT budgets, spending forecasts for 2009 have fallen, too.

Gartner has dropped its worldwide IT spending estimate for 2009 from 5.8% to 2.3%. Forrester has adjusted its U.S. technology-spending predictions for the year from 6.1% to as low as 2%. And IDC has ratcheted down its global IT-spending growth projection of 5.9% to 2.6%. U.S. spending won't grow as much as 1%, IDC predicts.