Credit crunch puts Web 2.0 plans on back burner

As CIOs prepare for budget cuts, investment in leading-edge projects first to be hit

Corporate Web 2.0 initiatives and other innovation projects will be major victims of the credit crunch, according to the vice president of Capgemini’s Technology Services division, Steve Sutton.

Web 2.0 has been hailed by many industry experts as the future of interacting with customers and doing business online. Forrester Research released figures today predicting that spending on wikis, mashups and other social networking technologies will hit £2.3bn globally by 2013.

However, Sutton advised that firms will focus on “going back to basics” with their technology projects as IT budgets shrink.

“IT budgets haven’t been reduced on a wide scale yet, but the mentality of firms is changing, and CIOs are preparing for their spend to be scaled back,” Sutton said. “People are moving back from leading-edge and innovation projects, such as Web 2.0, and instead thinking about getting the best value out of their existing SAP or customer management systems.”

He added that while Web 2.0 was on the radar for some firms, “I can’t point to any of our clients who’ve gone big on it”.

Sutton said that key issues for Capgemini customers are sustainability – incorporating areas such as corporate social responsibility - and security. “I don’t see these priorities changing as time goes forwards,” he added.

Although some industry watchers have predicted an increase in offshoring to counter IT budget shortfalls, Sutton argued that the credit crunch will have little impact on firms’ plans in this area.

“I certainly don’t see businesses doing less offshoring, it’s just too obvious if you get something for 20 per cent less. But a lot of companies have already done their offshoring, so the threat to onshore jobs will stay the same. People have known for a while there is a need to reskill and rethink,” he ex plained.

However, the public sector is an area that could benefit from a rethink on offshoring, according to Sutton. He pointed out that while offshoring is a “no-no” for agencies such as MI5, MI6 and GCHQ, which have certain security processes around the organisation, there is no reason the Foreign & Commonwealth Office, for example, could not look to invest in offshore services. “They do so much work overseas anyway,” he argued.