IT budgets "won't come back" to pre-recession levels

 

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By Barry Collins

Posted on 5 Oct 2009 at 14:37

Leading analyst firm IDC has warned IT managers their IT budgets may never return to the levels they enjoyed before the start of the recession.

IDC's research director, Chris Ingle, said the experience of previous recessions had shown IT budgets rarely fully recover before the next downturn begins.

"You have got to prepare for a world where budgets don't get back to where they were before," Ingle said.

Ingle claims businesses are still spending the vast majority of their IT budgets on maintenance, rather than investing in new IT that could help improve efficiency. "It's important we try and drive the maintenance percentage down," he said. "We need to think about how we transform our IT."

The IDC expert also says that short-term cost-cutting measures, such as reducing the headcount in the IT department, are ineffective. IDC research shows IT costs have continued to rise in relation to overall business costs, despite most companies implementing a real-terms cut in the IT budget.

"That says to me short-term cost reduction measures aren't working," Ingle said. "Companies that have cut IT staff need to do something more radical to achieve the cost cuts they're aiming for."

One such cost saving could come via virtualisation. Ingle claims that "we've really only just started what we can do with that," and that businesses should start preparing for more cloud services.

"With the cloud, maintenance costs should go down," Ingle said. "Users get more control over the services they want. They pay for it and so on. It's something you need to think about as you plan your infrastructure."