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IT budgets should include agility and innovation in light of recession

We’re almost at the end of 2008.


It’s been a year of cutbacks, layoffs, crashes and downturns. We’ve started using the word recession and are planning 2009 budgets accordingly. So, what happens next year? Forrester Research recommends investing in agility and innovation to accelerate out of the downturn, in a recent CIO-geared webinar presented by Forrester principal analyst, Bobby Cameron.

While interacting with IT executives on budgets and planning, Forrester found that 21% expected their budgets to either grow or stay the same in 2009. But most are anticipating a stagnant or cut budget and have moved into one of three planning scenarios: cutting, anticipating cutting or keeping their options open.

Although Forrester found that most companies are focusing on traditional cost-cutting tactics (such as using low-cost resources, eliminating large-sized efforts and focusing on short-term returns), it has seen some firms choose an alternate path — investing what they can into agility and innovation.

Why? Agile companies (those that can rapidly shift suppliers, trading partners or markets) are more likely to navigate through failing firms and slow economies. Companies investing in innovation will look for new business models and product/service offerings (alongside operational improvements) instead of just hunkering down.

When investing in agility, Forrester says, companies should focus on flexibility. For IT, that means applying SOA and creating flexible external interfaces to data and systems so that companies can more easily shift or change contractors, suppliers or partners. Innovation investments, such as utilizing Web 2.0 technologies to establish and spread ideas, can positively affect core business strategies by engaging internal and external sources in meaningful dialogue – without over-extending budgets.

There is no all-encompassing recipe for success, and Forrester recommends addressing the downturn based on current situations and industry:

  • Those already cutting budgets should execute on those plans to cut, while preparing to make deeper cuts if things don’t turn around. They should also consider investments in agility and innovation, but only if there is enough breathing room.
  • Companies anticipating cuts should invest in agility and innovation, keeping the commitments small and the returns short-term.
  • And those companies keeping their options open should pursue agility and innovation aggressively to maintain company health and leadership.

Keep your heads up – most pundits are expecting a leveling of the economy by the end of 2009. Are you ready for another 12 months?

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