CIOs still plan investment despite tight budgets

Forget fancy new technology projects - squeezing the most out of existing IT budgets and making sure projects pay back quickly are the top priorities for CIOs next year.

The Corporate IT Forum asked some of its top CIO members about their priorities for 2009, with managing costs and careful budgeting - as well as cutting back on technology for technology's sake - surfacing as key issues.

In the wake of the credit crunch, organisations are already being very careful with their IT budgets and trimming discretionary spending, and this caution is extending to next year's budget planning.

Denise Plumpton, director of information at The Highways Agency - one of the IT chiefs polled by the Corporate IT Forum - said top priorities include getting value for money from IT investments, while spending to improve business productivity and avoid larger investment elsewhere.

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The Highways Agency is putting more emphasis on assessing the "whole life" costs of IT projects, including internal resources costs which are often seen as free, she said.

"We calculate a cost/benefit ratio for each project and include that in the business case submission for funding. Our focus in preparing for our investment programme 2009-2010 will be to assess the cost/benefit ratio for each submission against the others - and to try to put some timescale on when the benefits will be realised, so that we can prioritise our investments according to what gives best benefit," she said.

For David Pirie, head of IT at National Car Auctions, managing costs is also a high priority, as is "ensuring that all spend is properly justified and essential to meeting our objectives".

Discretionary spend will be closely scrutinised, he said - investment and capital expenditure will continue "but a high degree of certainty over the payback and value to the business will be applied".

Pirie added: "What the downturn has brought about is a greater emphasis on value and a need to see results sooner. Although these priorities always feature on the agenda we're less likely to pursue speculative or higher risk initiatives, preferring to apply pragmatic, effective solutions to meet current needs."

Other CIOs were less positive when asked about their priorities by the blue-chip user group: "Cost reduction, minimum levels of service to ensure adequate business support. Consolidation of businesses and the removal of all optional work", said one anonymous IT chief.

The credit crunch has had an impact on forward planning, with the same CIO admitting "capital spend drastically reduced, revenue spend under close scrutiny with cuts likely".

Ian Campbell, chairman of The Corporate IT Forum, said the murky economic outlook has intensified the need to ensure there is no wasted investment or "leakage" as a result of poor cost control. He said investment hurdles are getting tougher to clear and projects must pay back in a shorter timescale - and are now often being openly challenged or subjected to stronger scrutiny.

As a result there is far less interest in "technology" projects, such as Windows Vista (something the silicon.com CIO Jury would agree with) or SOA, he said.

Is it all doom and gloom for CIOs next year? While one head of IT put it bluntly - "Business should expect less" - others see some green shoots of optimism in the form of a chance for the IT organisation to prove its worth in a downturn.

Most industry watchers are expecting new IT investment and project work to continue in the recession, with some analysts predicting that tech spending will be vital in helping businesses boost their efficiency, save money and retain customers.

"The downturn has not really changed our priorities but it has reinforced the value for money aspect and it has brought to the forefront of colleagues' minds that good use of ICT and data and information can pay back large dividends without necessarily incurring massive investment," argues the Highways Agency's Plumpton.

Another CIO predicts: "I think that as we work together with businesses on the whole value chain we will start to see some interesting developments in IT - more pull on collaboration tools which avoid travel, remote working tools which avoid building, system/ERP upgrades to consolidate and standardise."