7 Ways The Current Economy Is Affecting IT Spending
by admin
Things are pretty bad right now for businesses, and things seem to only be getting worse. In order to survive the extended financial storm, companies need to squeeze every possible bit of unnecessary spending out of all corporate cost-centers.
One of the areas being most harshly affected by these cutbacks has been the IT department.
Below, I’ve listed 7 of the most common ways companies are changing their IT spending, and how IT vendors can align themselves to take advantage of these opportunities.
Investments in training and education have been reduced.
This applies both to front-line staff and IT support staff. Companies are demanding simpler, and more intuitive interfaces… sometimes with fewer features. Also, this reduction in training will is leading to lower ROI since employees don’t leverage tools to their full potential.
In the near future, we may start to see more serious consequences emerge from this trend in the areas of compliance and disaster recovery… which are constantly increasing in complexity.
Companies are postponing their IT hiring decisions.
It staff are being pressured to do more work in less time with the same staff. This can lead to poor prioritization, where important long-term projects may get pushed back in order to put out smaller fires.
Also, employees might start pushing themselves past their limits. When this happens, staff will rush to deliver quickly without laying down the proper foundation. Otherwise, projects get delivered late and the quality of the work is poor.
The end-result is that projects end up having to be scrapped and re-done multiple times.
Hardware and software projects are cancelled or postponed.
Companies that try to cut costs by postponing critical upgrades will usually end up paying more as a result of higher Total Cost of Ownership. However, these additional costs may be harder to track and quantify.
Productivity, downtime and maintenance all need to be taken into account when evaluating the decision to postpone spending.
There are also other risks that come up as software vendors stop supporting older systems, and new “quick-fix” applications get added which could become a potential source of conflict later on.
Companies will cut staff.
Unfortunately, this is a tactic that’s increasing in frequency.
Whenever a company cuts staff, it has a devastating effect on morale and productivity. High-quality employees begin planning their exit, while low-quality employees become apathetic to the needs of the organization. Also, staffing cuts can cause hostility and political disputes amongst upper management.
Whenever a long-time employee leaves, you also lose a lot of critical undocumented company knowledge that can’t be replaced.
Asking IT staff to work longer hours.
An employee might gladly stay late to work for a day or two. But after 3 or 4 times, it will begin to feel imposing. To your IT staff, staying late effectively amounts to a reduction in salary and an imposition on their personal lives.
Over-working your employees might also have the opposite effect of actually lowering their productivity. There’s an old expression that says “a slave can get more work done in 6 days than he can in 7”.
Asking your employees to work late can also cause other legal, morale and staff turnover problems.
Outsourcing IT functions.
Outsourcing can be difficult because the outsourcing company must take the time to understand your IT systems and business processes. Also, there is some risk in the fact that an outsourcing vendor may also be working with competitors or other companies that may cause a conflict of interest. And if you ever have a problem with your vendor, there may be long-term contracts in place and the transition process will also be very difficult.
Implementing SaaS and Managed Services
Many companies are turning to SaaS instead of implementing new in-house systems because it requires no up-front capital investments. However, many companies are concerned about security and privacy of their business data when relying on a third-party provider. Business continuity could also be a concern if the SaaS provider ever goes out of business.
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