Why Not an IT Bailout? A Modest Proposal

 A recent CIO.com article caught my attention: “Top IT Spending Priorities in an Economic Recession.” Essentially, it suggests that despite current hard times, companies should continue to spend money on storage and disk management systems, business intelligence, virtualization, security and, of course, cloud computing. (After all, what IT story would be complete these days without a reference to cloud computing?) The story’s point is that investing in these technologies will save money (someday) and put companies in an advantageous competitive position once the bad times end and the good times return. In fact, the article concludes with an IDC projection saying that although the tech industry “will lose more than $300 billion in revenue” during the next four years, “IT spending will make a full recovery and enjoy growth rates nearing 6 percent by 2012.”   

In other words, happy days are just around the corner.   

I have no idea how IDC knows that 2012 is the magic year when everything will turn around but, unfortunately, my crystal ball has been in storage for some time (in my closet, not in the clouds). IDC’s, apparently, is all polished up and working overtime. However, what I do know, what everyone knows, is that not many enterprises have a lot of loose change lying around to invest in anything that doesn’t show an immediate ROI, let alone puffy clouds. I’m not saying that companies should hunker down in their foxholes, do nothing, and wait until all this blows over, but I do think we all need a little help. I mean, the banks, the brokerages, and the automakers have been lining up with their hands out, why not us IT folk?   

Accordingly, I propose that CIOs lobby Congress to get our fair share of that $700 billion economic bailout package.  After all, technology is just as important to U.S. business as, say, GM’s continued ability to provide the public with the Hummers they don’t want. And by giving IT its fair share of any bailout money, Congress can help all industries equally.   

But seriously, while I see the value in technologies like virtualization and, yes, even cloud computing for the future of IT, we also have seen technology (especially new, sexy, much-hyped technology) become an end in itself rather than an enabling force for value creation.  Everything has its proper time and proper place.  So while service provider-based clouds make sense for data backup and ASP services like Salesforce.com (CRM), it would be foolish to even think about spending money to move ERP and critical back office systems into this environment anytime soon. 

Realistically, if you want to get the budget and time necessary to create long-term business value, you’d better be delivering immediate ROI and implementing projects with fast payback.  Now is not the time to take on new projects that will require more staff, especially if you expect to reduce head count or even keep it flat. For projects that do have strategic importance, make sure you can garner the resources necessary to assure quick success. 

And before you start thinking long-term, you may be amazed at how much money you can save by taking the time to audit and assess your current environment.  Working in the trenches every day with companies big and small, the things I’ve seen would turn your hair white . . . or whiter. I’ve seen companies spend more in monthly maintenance on obsolete equipment than it would cost to upgrade to new systems (which would lower maintenance costs and increase user satisfaction).  I’ve seen companies embark on complete server virtualization only to see hardware upgrades, software updates and professional service fees add up to more than four to 10 times the cost of the actual license fees for the virtualization software. I’ve seen companies go through the pain and expense of migrating systems that they’re going to be decommissioning in the next 12 to 18 months. The truth is, with many legacy applications, it often makes the most sense to leave well enough alone.

So, as you look forward to 2009, you could keep banging on your CFO’s door to get the money to invest in new technologies while hoping for a slice of that government bailout money. (I wouldn’t hold my breath waiting for either to happen.)   

Or, you could take a hard look at your current infrastructure, people and processes and find creative ways to improve service and save money. It can be done, and in today’s environment saving money may have to take precedence over spending it. This may not be something your technology suppliers want to hear, but it does have the virtue of being something a CIO can control—unlike the clouds or whatever the year 2012 may bring.

As always, thank you for sending comments, tips and topic suggestions to me at CIOblog@TransitionalData.com.

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Michael Bullock is the founder and CEO of Transitional Data Services (TDS), a consulting firm helping clients implement energy saving green data center solutions, data center relocations, web based enterprise applications and 24/7 technical operations.