CIOs should create two IT budgets for 2008, according to research company Gartner.
Analysts speaking at the Gartner Symposium, in France, warned that due to the recent uncertainty surrounding credit markets globally, and persistent uncertainty around the future economic climate, companies need to plan for all possibilities.
They say CIOs should create two different budgets, the first reflecting the guidance already provided by decision-makers, and the second should supplement the first, as a backup budget that assumes the need to cut costs in response to a business slowdown.
"Although the financial outlook for 2008 is not certain, waiting for a clear economic trend to appear prior to taking action is not a prudent option," says Ken McGee, VP and Gartner fellow.
"There is already sufficient concern about the possibility of a business slowdown for next year from enough credible and independent sources to suggest that preparing a backup cost-cutting IT budget now is just plain good management."
Gartner adds that CIOs should have a recession budget and business plan in place ready for implementation long before needing to reduce costs. The analyst recommends these plans should target a decrease in IT spending of a minimum of 10% less than the highest annualised IT spending run rate levels attained in 2007.
McGee says CIOs and IT managers who preserve as much enterprise profitability as possible will benefit the company.
"Creating a responsible alternative recession IT budget now will demonstrate the type of innovative and forward thinking that senior executives expect to see from their staff," he says. "It will also show the kind of flexibility and agility needed to respond to fast-changing economic and business conditions."
Instead of viewing the possibility of a notable business slowdown or recession with anxiety, companies should seize the opportunity to develop a solution that will allow them to react quickly should this come to pass, he concludes.
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