Bailout, Stock Collapse and IT Spending

As I hear from end users and vendors in the aftermath of the past week, one thing seems clear as we look to next year -- more than ever before the "business" decision-maker (vs. the "IT" decision-maker) is going to be of increasing importance.

IT is so ingrained in so many core processes that it is going to be difficult for companies to simply cut it across the board as they might have during previous contractions.  A recent McKinsey report (Managing IT in a Downturn:  Beyond Cost Cutting) captures this well I think...

IT has come a long way over the past decade. Budgets grew rapidly during the dot-com boom and the run-up to Y2K, then declined drastically when the bubble burst. Over the following years, CIOs, working with business unit leaders, improved the performance of IT departments by streamlining application portfolios, reducing infrastructure costs, improving governance, consolidating vendors, and outsourcing many activities.

Much has changed across the business landscape as well. Technology now meshes tightly with operations in ways that weren’t possible a decade ago; the apparel maker Li & Fung, for instance, uses IT to manage supply chains with a network of over 7,500 different suppliers. At the same time, e-business, once a buzzword, now forms a part of the corporate status quo. IT capabilities have fostered new sales channels, defined new customer segments, and even helped create new business models.

These factors make reductions in IT spending more complicated than ever. Simplistic cuts, applied across the board, may endanger critical business priorities from sales support to customer service. That potent message should resonate even among corporate officers anxious to find quick savings.

What do you see on the horizon for the content, document, and records management industry next year?

In the short-term, there will certainly be pressure on suppliers who have focused on the insurance, banking, and financial services industries (i.e., most everybody).  Not only will there be less IT spending, but there will simply be fewer customers to go around.  In this environment, customer loyalty to particular vendors (as opposed to mere customer satisfaction) will be increasingly important in getting new or enhanced projects approved.

Downstream, no matter who wins the presidential election (and if I may be forgiven an editorial comment, were either of the candidates in the same universe last night as we all are living in?  The least they both could do is stop using year-old talking points in a world that has been turned on its head since last year... OK, I've vented...) I think there will undoubtedly be another round of calls for regulation and process control and transparency and documentation similar to what we saw in the aftermath of the Enron debacle (i.e., SarBox and its descendants).  But similar to the SarBox wave, I think it will take a while for this to move through organizations, and will likely be at least until 2010 before it manifests itself in IT spending to achieve these objectives.

What do you see out there?  How do you see the events of the last few weeks affecting your company's IT investment priorities?  Why not post a comment?