CIOs must plan for double-dip recession

But exercising caution does not mean second economic downturn will definitely happen

A new report from Gartner says that a second economic downturn is possible, and outlines the steps CIOs should take to safeguard their businesses.

Despite widespread signs of economic recovery globally, CIOs should be open to the risk of a worsening recession, it says.

But planning to slash spending and delay projects does not mean a second recession is definitely on the way, as its arrival depends on a number of factors.

Mark Raskino, vice president and fellow at Gartner Research, said: "There are fundamental issues in the global economy which haven't been sorted out and remain in a precarious state."

Increasing numbers of CFOs are expecting further recession.

"Once we see these sorts of predictions, we advise our IT clients to start kicking the tyres," he said.

Raskino believes that companies reliant on public spending are most at risk.

"Any SME with multiple lines of business is probably going to be okay unless it is completely dependent on government revenue," he said.

Gartner recommends that CIOs take the following steps:

• Enlist C-level action now: Because most official national recession declarations are announced well after the actual start of a recession, IT leaders should suggest that their enterprise executives convene now.
• Focus on the current financial year: CIOs should work with executives to determine which IT projects scheduled and approved under the current IT budget may be postponed and which could be cancelled.
• Focus on the next financial year: Once all projects for 2011 are identified, CIOS should determine which could be postponed and which cancelled, should deteriorating business conditions warrant these steps.
• Use zero-based budgeting for projects: As CIOs begin preparing for their 2011 budgets, they should adopt zero-based budgeting for projects in 2011.
• Use zero-based budgeting for existing applications: CIOs should compile an inventory of existing applications that are maintained by the IT staff and assign a reasonable estimate of the annual cost incurred to maintain each application.