Finding IT`s Upside in the Downturn

Dan Gingras expected panic.

Gingras, a former CIO at Bausch & Lomb and Watts Regulator Co. and now a partner at the consultancy Tatum LLC, frequently consults with CEOs and corporate boards on IT strategy. After the Wall Street fallout and the looming uncertainty following it, Gingras expected his clients to sound the alarm, particularly on IT spending.

What he found surprised him: Instead of panicking, business leaders–while acknowledging the economic duress–saw the downturn as an opportunity to reassess their strategies. Priorities had to be reexamined, but the knives never came out to slice up their IT plans. “I’ve never [before] seen a time in my six years of consulting where people wanted to step back and assess things,” he says. But that’s what’s happening now.

It turns out that despite the expectation of many experts that businesses would annihilate their IT spending and projects, many IT leaders are taking reasoned approaches to setting and executing on their technology priorities. That’s reflected in our 2008 Future of IT study, which found that IT leaders are more intent on improving business processes and aligning IT with business objectives than cutting costs.

Gingras attributes that shift to the maturity of technology, along with business’ growing understanding of its potential impact. “I think there’s a realization that this is important, that it’s not just backroom stuff anymore,” he says. “With that realization, the knee-jerk reaction has gone away, and we’re seeing a thoughtful re-evaluation.”

With that perspective come opportunities for improvement. Just look at Nathan Brimmer, CIO at Franklin Mint. Like the majority of retailers, Franklin Mint expected to take a hit. Cutting costs became necessary, and Brimmer and his team had to make some quick decisions.

Six months ago, they began looking for new ways to manage digital assets. They evaluated some six-figure products, but had to dial back their spending expectations. Then a few of Brimmer’s engineers stepped up and dove into creating an open-source program.

“If anything, the economic situation is forcing my guys to be more creative,” Brimmer says. “It allows me to see all the resources and talents we have.”

Cutting costs also helped them expand deeper into new and emerging technologies. Franklin Mint is currently in the process of changing ERP systems. Instead of spending $500,000 to $1 million in upfront costs on a big-name vendor’s product, Brimmer opted for a software-as-a-service offering, which cost about $15,000 initially.