Five ways to recession-proof your IT

With a recession on the horizon, it's belt-tightening time yet again. Andy McCue offers tips for making IT as cost-effective as possible.

It's official - we're heading into recession.

Prime Minister Gordon Brown has finally dared to utter the 'R' word and official figures now show the UK economy shrank in the three months to September, for the first time since 1992. If that is repeated next quarter then the UK is technically in a recession, though many individuals and businesses are feeling the effects already.

Recent research by analyst Forrester shows 43 per cent of firms have already cut back their overall IT budgets in reaction to the anticipated economic slowdown, with that figure likely to increase over the coming months.

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When CIOs tighten their belts, what feels the squeeze?

So how does an organisation trim its operational IT expenditure in lean times? Here are five ways to cope.

1. Squeeze your suppliers
Reviewing contracts with your suppliers is a good place to start when it comes to trimming IT costs. Forrester says more than two-thirds (70 per cent) of CIOs are looking to negotiate lower rates with vendors.

Graham Benson, IT director at M and M Direct, says: "Recessionary pressures increase the power of the purchaser in the supplier/customer relationship. So dust off all of the existing service and supply contracts and retender them - you will generally secure better terms."

In particular look at hours of cover and service levels and don't pay for what you don't need, advises Steve Gediking, head of IT and facilities at the Independent Police Complaints Commission.

He says: "It's amazing what some tinkering around the edges can achieve. Telephony costs are another target - are call plans up to date? Are you on the right tariffs?"

Don't be afraid to ask your supplier for input, too.

Neil Hammond, head of IT at British Sugar, says: "Talk to your suppliers about how they might help reduce costs - it may be they can offer a lower SLA at a cheaper rate. Ultimately a good supplier will look to keep the business even if it means the loss of some revenue."

2. Ditch the contractors
Recessions can mean redundancies but before cutting permanent staff, CIOs should first ditch contractors. Forrester's research shows 57 per cent of CIOs want to cut back on their use of contractors in the current economic climate.

Hammond advises: "Get rid of your contractors - this is a quick win. Don't let permanent staff go and keep contracts. Don't replace staff leavers - if it's a key resource leaving, use the opportunity to cross-train and promote internal staff rather than buy in another - probably expensive - resource."

3. Standardise
Allowing a wide variety of laptops and mobile phones might keep end users happy but it means more complexity and cost for IT. The same goes for applications - keep the options limited in lean times.

Chris Broad, head of information services and technology at the UK Atomic Energy Authority, says: "Diversity costs money so enforce standards and limit choice."

Another way to cut costs is to rationalise duplicate applications and systems, says British Sugar's Hammond. "This can be a good opportunity to standardise and reduce the total application portfolio. Communication and appropriate challenge is the key to success here."

4. Go green
Going green isn't just about saving the planet. It also makes financial sense for energy-devouring IT operations as fuel and electricity bills spiral.

David Supple, head of IT at Ecotec Research & Consulting, says: "It's a simple but effective adage - reduce, reuse, recycle!"

And it's not just about major, company-wide initiatives - small steps can make a difference too. Nic Bellenberg, IT director at Hachette Filipacchi UK, advises: "Set PCs to switch off at night, or at least make sure they go to sleep and turn off the screens. Turn off the office lights at night. And one I must do - make sure the server rooms lights aren't left on 24/7."

5. Put the brakes on the project pipeline
CIOs who manage IT projects as a portfolio will find it easier to reduce expenditure by prioritising investment.

Hammond says: "Kill the marginal projects and (possibly) slow down some of the existing projects. Slowing down the rate at which you commission projects in the project pipeline will help cash flow. Obviously this needs to be done in consultation with the business."

Analyst Forrester says CIOs should discuss the IT project portfolio with the CFO. Considerations should include which projects are 'must do' versus 'nice-to-do'; whether to increase the number of projects that reduce costs or choose ones that could increase revenue or customer satisfaction; and protecting new investments that will lower business and IT costs.

Forrester says almost a third of organisations now put projects and new initiatives through a rigorous return on investment process - in cost-conscious times this should also be done for new purchases and upgrades.

And don't upgrade just for the sake of it, advises Hachette Filipacchi's Bellenberg. "Of course if you've already got Vista and Microsoft Office 2007 licences, you're a lost cause. Most desktop hardware will give four to five years service happily, and servers far longer."