A/NZ CIOs moving quickly to cut costs: Forrester

Despite the fast pace of economic deceleration, CIOs have managed to quickly cut costs across the business without having a considerable impact on business outcomes and staff morale, Forrester Research has found.

In it’s A/NZ CIO Priorities In 2009 report, released this week, the company found that the average expected change in IT budget for this year was a decrease of more than four percent.

This was resulting in some serious cost cutting measures by CIOs the report, which surveyed 122 senior IT executives at enterprises in Australia and New Zealand between January to March 2009, found.

This included a strong reduction in the reliance on contractors and consultants with nearly 43 percent of respondents surveyed stating that they would cut the number of IT consultants and contractors in 2009.

Around 33 percent of CIOs surveyed plan to defer IT-related capital expenditures this year, and about 30 percent are reporting that the return on investment justification on IT projects has been increased allowing a reduction in the overall number of projects running.

Thirty percent of CIOs surveyed stated that their organisation had implemented a newhiring freeze. The refresh cycle has also been slowed significantly with 35 percent of CIOs stating that they are decreasing their budget for desktop computers and 30 percent decreasing their laptop budget.

“What is clear in the data is that A/NZ businesses are firmly focused on areas of high and fast ROI, as well as cutting costs,” said Tim Sheedy, lead report author and analyst at Forrester.

“Making large strides toward business objectives and cutting areas of considerable fat will both make a major impact on the business bottom line — which will be essential on the short- and medium-term future.”

He said A/NZ CIOs should look to three measures to continue to manage costs: consider continuing the reduction in infrastructure spend, conduct an IT organisation assessment, and implement Lean principles within their IT organisation.

“While the concept of Lean has been around for some time, it has not made a huge impact in IT,” he said. “Lean is a practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination.”