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Predictions
2003
Predictions
for the year 2003 do not present a very optimistic picture, writes MOHAN
BABU . While IT spendings are expected to drop further, large global
companies will focus on their key areas and continue to outsource to
countries like India for saving costs.
It
may be a bit early in the game, but predictions for 2003 IT
budgets are already starting to trickle in. And from what
I have been reading, the picture is not very rosy. eWeek,
a leading trade publication in the US, recently ran a series
titled “The 2003 IT budget pinch: Belts get pulled even tighter.”
Even though hope springs eternal in the human heart, those
living through current times in IT will not find these predictions
surprising. IT professionals are bracing themselves for everything
that the economy is throwing at them.
First
the bad news: faced with some of the worst economic conditions
in ten years and wary of recent Federal Reserve Bank reports
that economic recovery has lost steam, many enterprises are
deferring any increase in IT spending beyond next year. In
a survey of more than 1,000 companies in 46 countries, research
and consulting company Meta Group found that spending will
drop by 12 percent this year compared with the last and could
fall by an average of 15 percent further next year. IT budgets
are expected to remain static and if CIOs are cutting in one
area to increase spending in others, that leads some to conclude
that not all of it is doom and gloom.
If
the picture is so gloomy, will we see reduced spending, more
layoffs and slashing of projects? It’s hard to say at this
point. However, one thing is certain: core IT systems and
projects that provide justifiable return on investments (ROI)
and are essential to the functioning of businesses, will receive
funding. People will be needed to maintain and enhance such
systems. Where it will hurt is in projects and systems that
were easier to justify during the boom time. The “nice to
have” projects are the ones that are going to get the axe.
CIOs
and IT managers are expected to squeeze their precious dollars
and generate the maximum ROI possible by shuffling their budgets
around. Even though IT budgets are expected to remain static,
managers are working to ensure that the available resources
are used in the best possible way. This will lead to a shift
of resources from non-core IT projects to essential projects
that help businesses grow and make money. New projects and
moves towards newer technologies, including non-essential
system and software upgrades, will receive lower focus. Some
of the ways in which companies are looking to cut costs including
outsourcing their non-core operations and focusing on their
core operations. It is expected that management in many, if
not most, large companies across the globe will continue to
focus on some of the following areas:
Maintenance
of existing systems: Systems that work are expected to
continue to receive management focus since they have already
proven their mettle. The legacy systems are generally core
bread and butter systems that are the mainstay of operations.
Enterprise
integration and Web services: This follows from the previous
point about the need to maintain existing systems. Companies
that have invested in disparate systems over the years (and
decades), are going to examine ways of trying to integrate
the system and work towards providing unified view to their
partners and customers. This also includes Web-enabling the
enterprise systems and EAI projects.
Finishing
enterprise projects including ERP and CRM initiatives.
Projects that are halfway through are going to receive focus
since managements will be hesitant to throw the baby with
the bathtub.
Cost
saving initiatives: These include videoconferencing and
VOIP (Voice-over-IP) deployments. Investments in these initiatives
have proven to return tremendous benefits and companies will
continue to forge ahead. Security: There is little doubt that
information security will continue to remain a high-priority
area for organisations. This area of IT will continue to receive
a high degree of management backing.
As
the industry continues to remain sluggish, IT and technology
companies are looking at out-of-the box solutions and service
offerings to help their clients make money and save resources.
Even though technological innovations and product version
upgrades are slow moving, a few companies like Microsoft
are taking in the big picture and investing for the time
when the market will start looking up.
Outsourcing,
that has taken off in a big way will continue to receive
the focus and attention of marketing managers and IT strategists
alike because of the astronomical cost savings. Indians
and Indian organisations need to continue to pay close attention
to these trends in the US since our multi-billion dollar
industry depends on identifying and harnessing these trends.
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