The global economic meltdown in the last six quarters resulted in all round cost cuttings, shrinking of expenditures, freezing of new investments and compelled enterprises across industries to give second thoughts to any kind of expansion.

Among all the departments in an enterprise, the IT department was the worst hit as it is still being considered as a cost centre. However, in no way did the economic downturn reduce the expectations from the business houses in terms of productivity and profit. Rather, it forced the decision makers to pull up their socks and rationalise their budgets.

Though the severity of the recessionary impact in India is less than the US or other developed markets, experts opine that it did slow down the pace of growth if not completely paralyse it. Enterprises do recognise that availability of funds is a challenge, and that funds obtained are first deployed for core business activities. Barring some industries, IT investment falls under the category of 'discretionary investments' in most verticals.

“The biggest challenge for any IT organisation today is to be considered as a critical enabler of business, and a driver of profit rather than the currently held perceptions of technology being a support function and a cost centre,” says Govind Singh, Director-IT of Levi Strauss India, a global apparel brand.

WHAT'S IN STORE IN 2010
According to a Gartner-EXP Worldwide Survey of global chief information officers (CIOs), the IT budgets are expected to witness a marginal increase of 1.3 per cent compared to 2009, which saw IT budgets declining by 8.1 per cent.

This means CIOs are set for a very difficult time ahead, and will be expected to deliver more with less. “Our topmost priority is to deliver maximum output without hampering the budget,” says Sanjay Rao, CIO of SRF Ltd.

Many CIOs believe that IT expenses required to keep the current IT engine running are being included in the budget; however, there is a pressure to reduce these too. A few IT investments that can give high payback and immediate results in terms of cost savings are definitely being considered even during these times. However, attempts are being made to consider OPEX models as against CAPEX investments.

"CIOs see 2010 as an opportunity to accelerate the transition of IT from a support function to a strategic contributor focused on innovation and competitive advantages," Marc McDonald, VP of Gartner EXP group, said in a press statement.

The survey also mentions that business process improvement and reducing enterprise costs are top two business priorities for the CIOs, while virtualisation and cloud-computing emerged as the top two technology priorities.

However, not all CIOs feel capex allocation is a challenge. They are of the opinion that if the investments required can justify the benefits, then organisations would not hesitate to go that extra mile.

“Like any other organisation, we, too, face budgetary constraints. Having said that I'd say that the budgetary constraints never stop us from investing in projects where we see business value,” says Singh.

He says a CIO needs to convince the business guys about the ROI and its business value in order to get budgets sanctioned. “For example, if I propose to the management to deploy some technology tools which would increase the cost of the product by Rs 15, then I must convince them that the investment of Rs 15 per product would give returns of at least Rs 17,” he adds.

INNOVATION IS THE KEY
Budgets or no budgets you cannot play around with your bottom-line. Enterprises are pitted with this challenge all the time. And in most cases it is expected that in times of crisis, technology will come as a saviour. CIOs are expected to use IT as an enabler rather than see it as just a business support function. Expectations are shifting from a focus on greater cost-cutting efficiencies to achieving bet-ter results based on enterprise and IT productivity. These productivity gains will come from collabora-tive and innovative solutions that take advantage of the new light-weight, services-based social media technologies, including virtualisation, cloud com-puting and Web 2.0 social computing.

“While technologies are transitioning from 'heavy' owner-operated solutions to a 'lighter-weight' services model, the CIOs are, in turn, changing the role of IT from simply managing resources to taking responsibility for managing results,” says McDonald.

Also, the tough times in the past have taught many a lessons to CIOs and they have started prioritising the most essential technology requirements. “We are considering an IT Portfolio management approach wherein we are classifying returns as strategic (higher risk/higher returns), informational and operational (low risk /moderate) returns,” says Pravin Savant, CTO, Lowe India.

Moreover, the technologies that CIOs are prioritising in 2010 are technologies that can be implemented quickly without significant upfront expense. Instead of investments in technologies that will require millions of dollars to get millions in benefits, investments are being made in technologies where the upfront investments can be measured in thousands of dollars. However, Savant says that any innovation which might contribute to the business in some way might stand a chance of acceptance.

“We have a robust IT infrastructure, and we do not need any investment in near future; however, even if we consider some investment, our decision will solely be based on its long term benefits,” says Rao.

Technologies like virtualisation, cloud and Web 2.0 are the new tools in the hands of CIOs as these enable companies to get out from under a heavy investment model that limits IT's agility and flexibility.

CIOs see 2010 as an opportunity to accelerate the transition of IT from being a support function to being a strategic contributor to business.

gyana.swain@9dot9.in