A Leaner IT to Get More Strategic in 2010

Business leaders may be looking to IT as more of a strategic tool
rather than just a cost center as we enter into 2010, a year that many
believe could bring an economic recovery.

That’s because so many businesses put the clamp down on IT spending in
2009 during the deep global economic recession. And now that lean IT
machine that’s been created may be ready to take on new projects that
could in turn lead to business advantages.
Those are some of the conclusions of new research on IT leaders’
attitudes regarding spending in 2010, commissioned by Accenture and
conducted by the Economist Intelligence Unit.

“There’s been quite a shift if you go back to this time last year when
there was a view that we’ve got to cut costs,” says Jeremy Oates,
managing director of Accenture’s UK and Ireland Technology business,
talking about the global survey.

“There has been a significant reset in the way the world works,” says
Oates. “Leaders know they have to reduce the cost base, and at the same
time they need to do things to grow the business.”

Business leaders aren’t greeting the new year with an abundance of
optimism. Rather, given the way business and the economy has been
trending recently, they are taking a conservative but hopeful approach
to the business environment in 2010.

Forty-seven percent of respondents to the survey say they plan to
increase investment selectively in the next year, while 24 percent say
they will keep investment levels steady. Fifteen percent said they
would reduce investment selectively and 10 percent said they would
increase investment across the board.

Overall, Oates says he expects IT spending to remain relatively flat,
but is looking for some of the operational spending that has been
reduced to shift to strategic projects.

Accenture’s research shows that strategic areas for IT spending in 2010
will include server virtualization and consolidation, business
analytics and intelligence, and more customer self-service e-business
automation projects.

“What we’ve seen over the last few months is business leaders looking
to use IT to help cut costs in the rest of the business,” says Oates.

Specifically, 36 percent of respondents said they would invest in
server virtualization and consolidation, 34 percent said they would
invest in customer relationships and service, 31 percent said they
would invest in e-business including online selling and supplier
portals, 28 percent said they would invest in finance/performance
management and 28 percent said they would invest in service oriented
architecture. Business process engineering will be a focus for 24
percent, and 22 percent will invest in business analytics.

“There’s a continuing focus on getting customers to do the work that
was previously done in the corporation,” says Oates. “Customers are
doing more things online.”

Many enterprises have looked to simplify their software infrastructure,
taking a hard look at the number of applications that essentially
perform the same tasks and contain the same information. Together with
server virtualization, these enterprises have focused on reducing the
number of applications they run.

For large enterprises, Oates believes that the move has been to reduce
operational expenses in IT, cutting down the ongoing cost of running IT
but at the same time freeing up funds for strategic projects.

That may seem to run counter to the trend for cloud technologies and
software as a service, which add operational expense while eliminating
capital expense. Oates contends that SAAS and the cloud is largely a
factor for small business and midsize business, but not so much for
large enterprises. Yet.

“Smaller businesses can dematerialize their IT altogether,” says Oates.
“That’s an emerging approach and I think we will see some businesses
going down that path.

“However, I think it will be a while before we see enterprises going
down that path,” he says. “In larger enterprises there’s much more of a
legacy estate. It’s a bigger decision for them, and it’s not entirely
proven yet if it’s the right way to go for an enterprise.”

The Economist Intelligence Unit surveyed 557 executives in the August
to September 2009 timeframe. Fifty-five percent of respondents were
C-level executives such as CIOs, CFOs and CEOs, and two-thirds of the
respondents hold an IT function, with the remainder executing other
functional roles. Fully 62 percent of the companies surveyed have
annual global revenue of more than $500 million.