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
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
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
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.
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.
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