Some time ago, a CIO said that there are two 'R' words that scare CIOs RoI (return on investment) and recession. The only difference is that the CIO has to always worry about RoI, and only occasionally about a recession.But what happens when the two come together? More importantly, is the recession already upon us?
"No," says Rajnish Arora, Research Director for Asia Pacific Enterprise Servers and Workstations Research, IDC.
But, when iT ADDA asked him what CIOs had to be careful of in case the recession hit and hit hard he had plenty of ideas.
"CIOs should look at IT from an enterprise-wide angle and not think of it as silos operating in departments," he remarks. And, as CIOs always do, they should also try to reduce opex and capex, he says.
Arora also says that, more than ever, CIOs need to start thinking like business people and push innovation.
"They cannot think of just SLAs. They have to realise that a period of slowdown is also a great time for getting rid of inefficiencies."
One factor that is bound to hit CIOs hard in times of recessions is that the parameters that applied during an earlier recession may not always be directly applicable to a new recession. For example, the previous slowdown happened around 2000, when the dot-com bubble burst.
As Kirk B Skaugen, VP for Digital Enterprise Group and GM for Server Platforms Group, Intel, points out, in 2000 we had single core systems with one application a server, while in 2006 this shifted to quad-core systems
with six applications on each server. If we were to view this scenario from a different perspective, we could say that somebody who persuaded his management to invest in new hardware some time ago would be hard pressed to justify the RoI in today's slowing economic scenario.
Of course, this will not be hurting all companies equally badly.
Explaining that not everybody reacts the same way to a recession, Arora says that there are plenty of companies that continue to spend heavily on IT even in a slowdown because they see it as a competitive differentiator.
But Arora also sounds a note of caution when he says that CIOs should concentrate a lot more on innovation.
"In most companies, around two-thirds of the IT budget typically gets spent on maintenance and only the remaining one-thirds is spent on innovation," he says.
Arora believes CIOs should spend a lot more of their money on innovation and provide their businesses with the flexibility to manage during a slowdown.
But, can one really think about innovation when one is struggling to stay afloat? Maybe, this is the real challenge to CIOs.
