CIOs Trim Spending, Desktops Make a Comeback and More

This issue of Trendlines from the 9/1/08 issue of CIO magazine covers IT budgets, the return of the desktop, SaaS and the fight against cancer, why developers think the CIO is clueless and recent changes in the C suites around the country

CIOs Trim Spending, Staffing

Beset by challenging economic conditions, one in four CIOs is facing budget and staffing cuts, according to new research from CIO.

The survey of nearly 200 IT executives found that 26 percent plan to decrease their IT budget in the next 12 months, while another 26 percent will put spending on hold. One-quarter say they will cut staffing budgets for other contractors or temporary workers, and 21 percent plan to reduce full-time in-house staff.

Many CIOs are taking a "wait and see" perspective, says Mark Cummuta, president and founder of Triumph CIO Group and a CIO.com blogger. "They are being cautious but not negative."

CIOs are clearly battening down the hatches in response to the sputtering economy. But the mood was different last spring. Then, a CIO survey found IT executives unfazed by the prospect of an economic slowdown. At the time, only 17 percent planned to decrease their IT budget in the next 12 months; 20 percent said it would remain the same. Just 18 percent said they would decrease staffing budgets for other contractors or temporary workers, and 14 percent planned to reduce full-time in-house staff.

While she hasn't heard of widespread hiring or pay freezes across IT organizations, Gartner VP and certified compensation professional Lily Mok expects enterprises to take a conservative approach in budget planning and staffing for the rest of 2008 and into 2009. As the economy slows, companies may halt noncritical projects in the pipeline. For those that are mission-critical and under way, they would keep moving forward while closely monitoring industry and market movements. Mok says it takes time for corporations to analyze market conditions and take action.

Nearly a quarter of survey respondents said their primary investment focus is shifting from increasing efficiency to cutting costs. The top areas for trimming in the next 12 months are outsourced IT services (31 percent), computer hardware (25 percent) and telecommunications (19 percent). So IT departments should be ready to present specifics on ROI to business leaders, says Cummuta.

The survey also found that more small and midsize company respondents anticipate IT budget decreases in the coming year than three months ago. Twenty-seven percent of midsize companies anticipate IT budget cuts, compared with 15 percent in March. More large companies expect to put their IT budgets on hold (29 percent, compared with 22 percent for both small and midsize companies).

"There is more sensitivity to the economic downturn for the mid-market," says Mike Sullivan, VP of management information systems of GenTek, a $609 million manufacturing company. One reason, he says, is vendors often don't cater to the business needs of midsize companies. And these companies can't always meet their needs with a solution designed for smaller businesses, so they have to go big, which can mean more cost, he says.

-Jarina D'Auria

Is the Desktop PC Making a Comeback?

Laptops have had tremendous marketplace momentum in recent years, but the stodgy desktop may be making a comeback.

Converge, a company that does much of its work with chip spot markets, noted in a report that a rare shortage has emerged in desktop microprocessors. "The story of the third quarter has been the dramatic resurgence of shortages in the desktop market after a sustained period of relative calm," the report says.

Most microprocessors are sold to major buyers such as PC vendors Hewlett-Packard and Dell, but some are sold to the global spot market. While the spot market can be an early indicator of a trend for chips such as dynamic random access memory (DRAM), that's not always the case in the microprocessor segment, which is far smaller.

The report says the phaseout of an older microprocessor family caused product shortages last year, and that may be happening this year with Intel's Pentium E series Conroe family. Still, there is other evidence of something going on with desktops.

Research house Gartner noted in its second-quarter PC market report that desktop shipments gained traction among professional users in the U.S. due to growing economic uncertainty. Desktop PCs cost less than mobile PCs, so they are a cheaper option for businesses with tighter IT budgets.

Chip maker Intel also noted some strength in desktop PCs during a conference call after its second-quarter results. Executives said prices for its desktop microprocessors remained constant in Q2 due to demand for desktop products in emerging markets and corporations.

-Dan Nystedt

SaaS Organizes Donors in Cancer Fight

Susan G. Komen for the Cure, a nonprofit that pursues the goal of eradicating breast cancer by funding research, is adopting an online customer relationship management (CRM) system for its headquarters and 125 affiliates.

The decision to move to a software-as-a-service (SaaS) offering centered around the need to centralize the fund-raising efforts of the affiliates, which historically had disparate technology applications. "They all had contracted independently for IT services," says Justin Ricketts, Komen's VP of IT. "This wasn't an inherently efficient way to leverage technology."

Rather than go through the task of having an on-premise vendor integrate the databases and install software on machines with different capabilities and operating systems, Ricketts chose a SaaS offering from Convio. This isn't Komen's first foray with the vendor. Fifty Komen affiliates use Convio's TeamRaiser, online software that helps participants in Komen's "Race for the Cure" raise money and garner sponsors.

Komen is using Common Ground, which Convio built on the Force.com platform from Salesforce.com. It gives users a unified view of how a nonprofit interacts with donors, volunteers and advocates. Users also have access to AppExchange, a set of third-party applications that developers who use the Salesforce platform have built. "I can tap into that developer community and add capabilities," Ricketts says. He says the SaaS pricing makes it easier to predict technology costs. (Komen will pay per user per month.) Also, he won't have to handle as much back-end infrastructure and maintenance work since Convio will host the data.

Komen will implement the system for headquarters and some affiliates this fall, with rollout for all the affiliates targeted for late 2009.

-C.G. Lynch

Why Your Developers Think You're Clueless

CIOs hold one of the most important executive positions in their companies. And to lead successfully, they must earn the respect of both the business and their information technology organization. Mike Gualtieri, senior analyst for Forrester Research, offers up six behaviors to steer clear of if you want to avoid being seen as a clueless CIO. Read the rest here.

1. The CIO is a control nut. Okay, so maybe it is just a strategy you are employing because your direct reports can't get the job done. If this is the case, then control is not the solution. Have the courage to replace those managers that aren't strong. Control won't work in the long run anyway.

2. The CIO is aloof. You may have a great team—strong individual managers and team chemistry—but your leadership is still necessary to keep things on course.

3. The CIO gulps vendor Kool-Aid. You are smart enough to know that vendors are trying to sell you and you won't be fooled wholesale. Yeah right. Their influence can eat away at you without you even realizing it. Be even more skeptical than you are now. Just say no.

4. The CIO is a technical dinosaur. Technology has changed since you were writing RPG on the mainframe umpteen years ago. And for you younger guys who made your bones writing VB or Java Web apps, make sure you know why there is so much buzz about Ruby on Rails and multicore programming. Your ability to talk tech will help you earn the respect of application development professionals.

5. The CIO thinks changes can happen overnight. Sorry to have to break this to you: You are not a wizard and your magic wand doesn't work.

6. The CIO doesn't know the difference between resources and talent. The fastest way to lose respect is to put clueless managers in charge. Find a way to locate and use the talent in your organization.

-Mike Gualtieri

Morrison Exits Motorola; Jones Is CIO

Last month Patricia (Patty) Morrison left Motorola after serving as the mobile phone company's CIO since 2005. It had been an open question how long she would remain with Motorola, given all the management changes the company has been undergoing as a result of ongoing business challenges. Morrison currently serves on SPSS Commerce's board of directors. Leslie Jones, an eight-year veteran of Motorola, replaces Morrison in the SVP and CIO post. Jones most recently served as vice president of IT for Motorola's Enterprise Mobility Solutions and Home & Networks Mobility segments.

Citigroup named Marty Lippert as its new CIO as the struggling finance giant attempts to revamp operations and achieve a massive rebound in its fortunes. Lippert, a veteran of IT and business management roles at the Royal Bank of Canada and Mellon Bank, has the additional role of corporate operations and technology COO at Citi, underlining the group's attempts to consolidate IT spending and the operations budget.

Chrysler CIO Jan Bertsch was appointed SVP and treasurer for the automaker's global treasury operations. She maintains the CIO title and responsibilities in her new role. Bertsch is leading the effort to consolidate IT management and treasury into a new structure (see "Saving Chrysler"). She joined Chrysler in 2001 and served as vice president of sales and marketing finance. Ericsson EVP Björn Olsson is leaving to pursue new opportunities at the end of the year, according to a company announcement. Olsson, a 27-year veteran of the mobile communications company, was CIO from 2002 to 2003.

-Meridith Levinson and Martin Veitch

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