Why CIOs need two IT budgets next year

CIOs should have two separate IT budgets for 2008 given the current uncertain economic climate, according to analyst house Gartner.

The first budget should stick with the status quo but be supplemented by a second back-up budget, which assumes the need to cut costs in response to the arrival of a business slowdown over the next calendar year.

Ken McGee, vice president and Gartner fellow, said although the financial outlook for 2008 remains far from certain, waiting for a clear economic trend to appear prior to taking action is not a prudent option.

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McGee added there is already sufficient concern about the possibility of a business slowdown over the next year from enough diverse sources to suggest preparing a back-up cost-cutting IT budget now is just plain good management.

The analyst house said CIOs should have a 'recession budget' and business plan ready for immediate implementation long before being asked to reduce costs.

But not all IT chiefs are likely to find it easy to cut costs. According to recent research from EDS, CIOs are caught in a "value trap" where 80 per cent of their budget goes on keeping legacy systems alive.