The Challenge Of It In Downturn
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The challenge of IT in Downturn Corvinus University of Budapest & ITSMf Hungary Dr. Péter Fehér
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Presentation on the CONFENIS 2009 Conference, Győr, Hungary
Transcript of The Challenge Of It In Downturn
The challenge of IT inDownturn
Corvinus University of Budapest& ITSMf Hungary
Dr. Péter Fehér
b„In an economic climateof slow and cautiousgrowth, IT is underintense pressure tomanage costs and ensure that spendingis well aligned withbusiness drivers”
Stevie Sacks, Computer Associates
2004
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anstraelen
Impact of the crisis 2008-2009
Source: Bryan, L. Hoffman, B. (2009) How managers should approach a fragile economy, in: McKinsey Quarterly, September, 2009
Stabilisation 2009?
Source: Bryan, L. Hoffman, B. (2009) How managers should approach a fragile economy, in: McKinsey Quarterly, September, 2009
Crisis reactionsCost reduction
Debt managementSupplier management
Customer reliabilityReducing organisational complexity
Increased controlling and visibility
„…take the issues seriously, you have not taken before. Do, what you haven’t done, yet…”György Bőgel, CEU
Picture by Ruth Livingstone
Cost cutting efforts
Value creation through IT
Business cost reduction Time-to-market ration, quality, efficiency
Business innovationwith IT
„Information technology is seen as vital to business innovation, but the IT function is not”
0% 20% 40% 60% 80% 100%
IT function is the main initiator of business innovation
IT function is a driver for business innovation
IT is critical for business innovation
Yes
No
Sevillia, O. – Nannetti, P. – Monnoyer, E. (2008) Global CIO Survey 2008 –The Role of the IT Function in Business Innovation - Innovator vs Operator, Cap Gemini
IT has a significant role in implementing business innovations
strongly agree; 35%
agree; 10%
neither/both; 35%
disagree; 20%
3,6
of 5
IT has a significant role in implementing business
innovationsSource: Survey results 2009
Our IT function is the main initiator of innovation
strongly agree; 5%
agree; 20%
neither/both; 40%
disagree; 20%
strongly disagree;
15%
2,8
of 5
Our IT function is the main initiator of innovationSource: Survey results 2009
Cost reduction (2008 Q2)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Kategória 1 Kategória 2
Sorozat 1
Sorozat 1
Cost reduction(share of organisations)
No
Yes~80%
Source: Survey results 2009
Is your IT budget going up or down in real terms comparing to last year? (2009)
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
40,00%
Down (> 20%)
Down (10-19%)
Down (1-9%)
Static Up (1-9%)
Up (10-19%)
Up (> 20%)
Source: Survey results 2009
~20%
Cut costs, but where?
• Human resources• Suppliers• Sourcing models• Risk management• Operation costs• Processes
• Business demandspecification
• Conscious project management
• Project portfoliomanagement
• Business case analysis• Open-source solutions
Development; 45,00%
Operations; 55,00%
Cost cutting expectations 2008 Q2
Sourcingmodels
Short term reactions 1
0,00%
20,00%
40,00%
60,00%
80,00%
100,00%
Stop new hiring
Project starts based on
business case
Postpone procurements
Renegotiate supplier
contracts
Stopp or limit development
projects
Layoffs Stop consulting activities
Decreasing salaries and
benefits
Already accomplished Planned Not expected
Source: Survey results 2009
Short term reactions 2
0,00%
10,00%
20,00%
30,00%
40,00%
50,00%
60,00%
70,00%
80,00%
90,00%
100,00%
Project starts based on
business case
Postpone procurements
Renegotiate supplier
contracts
Stop/limit development
projects
Stop new hiring
Stop consulting activities
Layoffs Decreasing salaries and
benefits
Already accomlished Planned
Source: Survey results 2009
Planned projects
0,00%
10,00%
20,00%
30,00%
40,00%
50,00%
60,00%
70,00%
80,00%
Operation optimisation
Process management
Development of IT Service
Management
Changing sourcing models
Developing project
management
Using open-soruce
solutions
IT risk management
Source: Survey results 2009
Contraversial view of IT
"IT investments deliver more value to a company [...] -by creating new efficiencies and increasing revenues -than any savings gained from traditional cost cuttings."
Kaplan, J. - Roberts, R.P. - Sikes, J. (2008) Managing IT in a Downturn - Beyond cost cutting, in: McKinsey Qualterly, Fall 2008, pp. 66-71.
Crisis management results
• Survive
• Lack of resources
• Rethink current practice
• Waiting for better times
Thank You!
Dr. Péter Fehé[email protected]
Corvinus University of Budapest
Department of Information Systems
ITSMf Hungary
