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Is IT innovation possible now?

Before the economy crashed and the word recession was officially applied to the economy, the buzzword of the IT conference circuit of 2008 was innovation. The trend, we were told, would be that as the more basal functions of IT move inexorably to service providers, the internal IT shops would focus more on strategic initiatives — those that differentiate the business and generate revenue.

This was not just idle chatter. Between 1994 and 2005, IT did indeed generate revenue. IT accounted amazingly for two-thirds of the all productivity gains in this country! And there is no doubt that since 2005, IT innovation has been, if anything, going on at an even faster pace, with technologies like virtualization and Software as a Service (SaaS) fundamentally transforming how IT is done.

But the signs are not good, at least for the immediate future.

In our TechTarget September 2008 survey of some 1,000 IT professionals, nearly three-quarters said the economy is now the single biggest factor in their decision making — and this was before the November market nosedive. Three-quarters of the respondents said their IT budgets would be further curtailed if things do not turn around in the first six months of the year.

So, what is on the chopping block if budgets shrink?

According to the TechTarget survey, what is still safe is compliance, followed by disaster recovery and business continuity, the network, security and custom apps. What’s not safe? Not surprisingly, people — job security always goes down in tough times. What’s also likely to be jettisoned are the newer technologies — SaaS, mobile enhancement, wide area network optimization/acceleration, SOA.

The fierce urgency of now means that technologies that save money, that provide transparency and allow companies to absorb change will be implemented before any newfangled innovation.

So is innovation in jeopardy? It depends on how you define innovation.

Two quick examples. One is from a government CIO I talked to recently. All of the new projects he was planning on for next year have been put on hold. The one new project he has been told to go full steam ahead on is automating a business process that was previously done by human beings, because, guess what? Those human beings are no longer there. Re-engineering a business process is not a new technology, but it’s new to him for next year.

Here’s one more, from a CIO of a large building services company. He’s building a social networking site – an au courant technology, to be sure. But it’s not just to show how cool the company is. It is to save his company money on consulting fees and leverage its workforce. The site is tapping a database of former, retired employees to act as consultants to his employees who still have their jobs.

Will the recession kill IT innovation at your shop? Let me know.

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Yes, frightening but true. We were in the middle of a review of our strategic plan on IT infrastructure when the first symptoms of recession were felt here - a large bank in South America. We were planning to implement many IT innovations, but the horizon is grey. We didn't find out yet what to do exactly, but certainly when the reviewed budget for the next year is known we will have to focus on small profitable projects.