How to innovate IT if your budget is cut

Tough economic times call for drastic measures. Learn how to focus on innovation when your budget has been slashed and IT strategy is centered on the maintenance of current applications.

Shawn Banerji, a CIO recruiter at Russell Reynolds Associates Inc. in New York, encountered dozens of midmarket CIOs at a recent leadership conference, worried about not just keeping their jobs, but also how to do their jobs in an economy where budget cuts, hiring freezes and tabled projects are the current reality. While every situation is different, Banerji does have this advice: It doesn't have to mean your professional future has...

stalled. Upshot: This economy could be the best thing that ever happened to your career.

In late October, I co-led a panel discussion at the Fairfield/Westchester SIM CIO Executive Leadership Summit on the CIO's role as agent of transformation and change. The conference was well attended, with nearly 450 participants overall and approximately 120 attending our discussion. During the question-and-answer portion of the discussion, an interesting trend emerged in the questions we fielded from the audience. While many CIOs want to focus on development and innovation, they increasingly encounter resistance from senior leadership. In fact, some members of our audience had been informed by CFOs or COOs that economic conditions were forcing an IT strategy centered around maintenance of current applications, rather than any additional investment in innovation.

Shawn BanerjiShawn Banerji

So what does a change in IT strategy, with more focus on cost-cutting and maintenance, signal for the role of the CIO, they wanted to know. Can IT executives expect to see their relevance diminish along with their budgets? Will CFOs begin to manage IT directly, through a cost-center optic? Does this change in attitude illustrate a larger frustration among CEOs who are unable to understand or point to IT's tangible top-line contributions or bottom-line savings?

Having counseled business information officers for more than a decade, working closely with the leadership cadres responsible for defining and managing the CIO role and IT function, we know these issues are raised during both robust and challenging times. Prior market downturns teach us that incredible opportunities emerge during times of change and flux. Despite challenging economic circumstances, CIOs can employ a host of tools that allow for meaningful business contribution.

For example, the economic slowdown from 2000 to 2003 was crucial to the creation of a new paradigm in CIO leadership. Prior to the slowdown, many information officers considered budget and head count the key metrics to measure the IT executive's importance to an organization. Compressed budgets may have been the hallmark of the period, but opportunities for process improvement and technological innovation produced an IT model that focused on doing more with less. Large budgets and land army head counts became targets on the backs of many CIOs. Leaders recognizing this scrutiny quickly moved to adopt a new, thriftier IT philosophy, ultimately creating a meaningful, differentiating business value.

A similar opportunity exists today. Information officers should take this opportunity to proactively engage business partners, internal customers and fellow corporate officers. Risk management, governance, supply chain management, sourcing, process improvement and re-engineering for reinvestment in innovation are front and center on corporate agendas. Technology enables all of these processes and functions.

Consequently, it is the obligation of business information officers to dialog internally in order to identify and execute against these opportunities. IT's role within an organization should be formed out of its ability to maximize efficiency, particularly within companies that largely ignored technology's contribution during stronger economic times. This downturn is another opportunity to create an even more visible role for IT within the enterprise. CIOs who recognize this will be able to create and drive an even more compelling professional value proposition for their organizations.

Shawn Banerji is a member of the Information Officers and Business and Professional Services Practices within the technology sector at Russell Reynolds Associates. Email any questions to editor@searchcio.com.

Next Steps

Economy forces CIOs to cut software spending

Five ways to trim your budget (and save your career)

Managing your career in an economic downturn

This was first published in November 2008

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