An IT hiring slowdown is probably already here. David Van De Voort, a principal of human resources consulting firm Mercer, says that while he hasn't seen big reductions in IT staffs yet, demand for new hires seems to be dropping off. "In late 2006, early 2007, hiring was picking up, and we were even seeing some sign-on bonuses returning," he says. But now it looks frozen again. There's still demand for certain skill sets, Van De Voort says, but a "hunkering down" is starting to set in.
At auto parts maker Dana, all new positions, including those in IT, have to be approved by the CEO. The IT staff is small and has been shrinking through attrition ever since the company filed for Chapter 11. And while Marillier isn't planning to hire in the near future, he hates to contemplate the opposite. "We can't cut any more," he says.
Even as a majority in IT hold on to a cautious optimism about the economy, that edge of desperation is starting to creep in. "We've already reached a point where, if you cut more, you'll have issues," says Alok Kumar, information security officer at computer system vendor NCR. Kumar says NCR has been on a cost-cutting tear the last several years, driven by former CEO Mark Hurd, who's now doing the same thing at his current employer, Hewlett-Packard. Since Hurd left a couple of years ago, though, NCR's IT spending has leveled off. "Last year we didn't cut anything, and this year we're still moving ahead as planned so far," Kumar says. Still, the cutbacks haven't left much room for accommodating a dramatic downturn, though if that happens Kumar's sure that IT, like other business units that don't generate revenue, is vulnerable to even more cuts.CIOS NEED A GAME PLAN
So what should business technology executives do in this challenging economy?
For one, start putting the pressure on vendors to get better deals, even if contracts aren't up for renewal, says Ken Harris, CIO at Shaklee, a maker of health and cleaning products. Harris' main approach to identifying savings from vendor contracts--and everywhere else in the IT budget--is zero-base budgeting reviews, whether he's trying to cut costs or just ensure that costs are as low as they can go.
Zero-base budgeting assumes there's no budget for the next year and forces people to justify every dollar they spend; it makes them look at each item individually and ask if it's really needed. Harris encourages everyone on the IT management team to get involved in the process and asks that the CFO or a CFO designee be involved as well. By involving a senior financial person, there's an "independent voice" that can confirm that everything's been evaluated. "This solves the communication problem," he says.
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