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In Great Recession of 2009, three CIOs do more with flat IT budgets

In the year of the Great Recession, CIOs are doing more with less or the same, focusing on certain key areas.

Nick Garbidakis, CIO of the American Bible Society, has roughly a flat, $6 million IT budget at his disposal for the fiscal year beginning July 1, as in prior years. But this year he is spending it differently. He is re-evaluating most of his vendors, negotiating with all of them, cutting a few and demanding better returns on investment for new technology.

As for the nice-to-have stuff? "We don't have it anymore," Garbidakis said.

"For every single project, I had to make a business case, show the return on investment for all them," said Garbidakis, one of the CIOs featured at yesterday's TechTarget Inc. ROI Summit in Newton, Mass.

Running IT like a business is not new to the recession. CIOs have been under pressure to run lean since the dot-com bubble burst in 2001, taking hundreds of thousands of IT jobs with it. But in a year like no other, many CIOs are seeing flat IT budgets -- or decreases -- after several years of growth. A TechTarget survey done in fall 2008 found that nearly 38% of CIOs expected their IT budgets to decrease, and 33% to stay flat in 2009. Spending, the survey found, is targeting IT upkeep -- the upgrades, software licensing and leasing contracts critical to keeping the business running.

The picture has hardly brightened since then. Earlier this month, Gartner Inc. revised its IT spending forecast significantly downward, saying the "speed and severity" of the business and consumer response to the current economic crisis are causing a slowdown in the IT markets that will be worse than in 2001, the last time IT spending declined. The Stamford, Conn.-based consultancy now expects worldwide IT spending to decrease 3.8% in 2009 over 2008 -- paralleled by about a 5% decline in IT budgets, also down from projections in October of flat to 2% growth.

There are, however, pockets of activity. Security spending, as percentage of IT budgets, is on the rise. And the three CIOs we checked in with here all had flat IT budgets but are striving to do more with the same.

At the American Bible Society, Garbidakis is spending money on data protection and consolidation. Disaster recovery and business continuity, upgraded after the 9/11 terrorist attacks, remains a priority for the New York-based society, which posted revenue of $113 million in 2008. Recently, spam filtering was moved off the network to an outside provider "because the value proposition was as clear as day," said John Mark Mitchell, associate director of IT services.

As budgets tighten, the 193-year-old Christian charity, whose mission is to make the Bible available to people worldwide in every language, hopes to investigate how business intelligence software can give better insight into its data and improve processes. A virtualization project to consolidate 28 Web servers to four boxes is on the horizon.

Garbidakis and his crew of 18 internal and contracted IT professionals are hardly alone in wringing every penny out of IT investments.

"My CFO was delighted to hear me say, 'Just give me what you gave me last year, and I'll figure it out,'" said Jay Leader, CIO at iRobot Corp., the $300 million maker of consumer and military robots in Bedford, Mass., referring to his '09 budget. As a growth company, iRobot is not looking to cut IT spending, Leader said, but his charge is to "make us more effective, make us more productive and make up for places where we have to reduce."

Transparency into IT operations is paramount in tight times. "The board is looking for ROI," said Steve Morin, CIO of $800 million staffing company TAC Worldwide Cos. Morin, who will also have a flat IT budget this year, is participating in a massive IT project as the six companies that now belong to TAC's Japan-based owner move ahead with consolidating and rationalizing IT infrastructure across the enterprise.

When it comes to compliance -- another recession-proof area, eating up on average about 8% to 12% of IT budgets, according to the latest figures from Gartner -- Leader is taking a hard-nosed approach. "I plan to be one penny compliant and not a dime or dollar more. We will be compliant to stay in business, but it does not add a dollar to the business," he said.

The recession and ingenuity

If the American Bible Society is any example, the economic slowdown is also bringing innovation that was not happening in more flush times. In the midst of budget constraints, IT spearheaded a Web project that had eluded the organization for many years -- a small, IT-enabled modification that is not just saving money or realizing efficiencies, but also actually bringing in revenue. 

For every single project, I had to make a business case, show the return on investment.
Nick Garbidakis CIOAmerican Bible Society

Internal research showed that people who purchased bibles were also disposed to making donations, Garbidakis said. While bibles sold in bulk at low prices were the draw for customers, so was the charity's mission. But the two efforts -- Web sales and donations -- operated independently. What if a single line were added to the Web checkout process asking customers if they would also care to make a donation?

IT made the business case for spending "a few thousand dollars" to outsource the project to a Web developer so it could be up and running by the fourth quarter, when many contributors rush to get in their donations by Dec. 31 for tax purposes. The Web solicitation brought a 16% response rate -- double the 8% response rate from catalogues and calling a 1-800 number. Since the first of the year, the per-dollar amount donation has increased.

As for why the project had eluded the organization, Mitchell and Garbidakis are politic, to say the least. The lull in the economy has actually afforded the organization "an opportunity to be more introspective," Mitchell said, and forced it to analyze if it could increase efficiencies and capitalize on its assets.

"One of the attributes of IT is that it has visibility across multiple systems and processes, allowing us to see the bridging of what otherwise might be assumed to be separate operations," he said.

Let us know what you think about the story; email: Linda Tucci, Executive Editor.

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