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Could Big Chill Of Recession Hit IT?

Posted by John Soat
March 22, 2008

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To paraphrase an oft-used financial aphorism, when business sneezes, IT organizations catch a cold. Amid grave worries about the U.S. economy's health, tech leaders are preparing to cut projects and spending as needed, and in most cases already are, our survey of 374 business technology pros shows. Hiring's by far the first thing that will be put on hold, with infrastructure upgrades and new application projects next in line.

So far, less than half, 43%, of respondents to an InformationWeek survey, conducted the first week of March, haven't been asked to change their IT spending because of the worsening economy. Of the rest, 28% say they've been asked not to increase IT spending as much as they had planned; 23% have been asked to cut the budget by a specific percentage; and 20% have been asked to cut specific projects. Some companies are taking more than one of these cost-cutting steps.

Joe Buser, VP of information services at Delta Faucet, isn't going to get the increase in IT spending he was looking forward to this year, as the slowdown in the housing market hits company profits. He's already cut a couple of nice-to-have projects, such as a network access control security application and an integration project that would have fed Dun & Bradstreet credit-worthiness data into Delta Faucet's ERP system. What isn't going to get cut: customer-facing projects. "We're doing the right things," Buser says.

Business leaders increasingly are asking how long and how bad a recession could be, not whether we'll face one. JPMorgan Chase's recent buyout offer for investment bank Bear Stearns--at the fire sale price of $2 a share, engineered with the help of Federal Reserve officials--only adds to the worries.

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