Shrinking economy pushes IT focus back to cost saving

IT chiefs advised to identify where projects can be delayed as UK economy weakens

With yesterday's economic indications suggesting another rough year for UK businesses, IT chiefs have been advised to quickly identify where savings can be made.

The latest figures from the Office of National Statistics (ONS) have heightened fears over the fragile state of the UK economy.

Initial estimates from the ONS suggest that GDP fell by 0.7 per cent in the fourth quarter of 2010.

Such a decline may force business leaders to re-evaluate their priorities for 2011 and could mean non-critical projects get put on the back-burner, Neil Ward-Dutton, research director at analyst group MWD Advisors told Computing.

IT leaders need to demonstrate they understand how macro economic conditions affect business priorities and be able to elucidate how IT can achieve that.

"Any CIO doing their job will understand the conditions in their industry and IT's role in helping the business adapt to changes," he said.

And it looks like 2011 will be another tough year for businesses.

"The unexpectedly bad GDP figures in 2010 suggest that expectations of growth in 2011 will be revised downwards," said Graeme Leach, chief economist at the Institute of Directors. "We're in for a rough ride."

If businesses have to expect lower growth, IT leaders will likely look at which projects can be delayed as well as identifying which are critical, said Ward-Dutton.

A weakening economy is unlikely to affect capital investment plans immediately, but it may place a squeeze on operational expenditure, he said. Consequently, any project that would involve additional expenses, such as the use of contractors, needs to be re-evaluated.

"You want to be able to come up with a list of projects that are critical to supporting the business strategy and ones that are nice to have, but can be delayed if necessary," he said.