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Article by Mohan Babu


Predictions 2003

 Predictions for the year 2003 do not present a very optimistic picture, writes MOHAN BABU . While IT spendings are expected to drop further, large global companies will focus on their key areas and continue to outsource to countries like India for saving costs.

It may be a bit early in the game, but predictions for 2003 IT budgets are already starting to trickle in. And from what I have been reading, the picture is not very rosy. eWeek, a leading trade publication in the US, recently ran a series titled “The 2003 IT budget pinch: Belts get pulled even tighter.” Even though hope springs eternal in the human heart, those living through current times in IT will not find these predictions surprising. IT professionals are bracing themselves for everything that the economy is throwing at them.

First the bad news: faced with some of the worst economic conditions in ten years and wary of recent Federal Reserve Bank reports that economic recovery has lost steam, many enterprises are deferring any increase in IT spending beyond next year. In a survey of more than 1,000 companies in 46 countries, research and consulting company Meta Group found that spending will drop by 12 percent this year compared with the last and could fall by an average of 15 percent further next year. IT budgets are expected to remain static and if CIOs are cutting in one area to increase spending in others, that leads some to conclude that not all of it is doom and gloom.

If the picture is so gloomy, will we see reduced spending, more layoffs and slashing of projects? It’s hard to say at this point. However, one thing is certain: core IT systems and projects that provide justifiable return on investments (ROI) and are essential to the functioning of businesses, will receive funding. People will be needed to maintain and enhance such systems. Where it will hurt is in projects and systems that were easier to justify during the boom time. The “nice to have” projects are the ones that are going to get the axe.

CIOs and IT managers are expected to squeeze their precious dollars and generate the maximum ROI possible by shuffling their budgets around. Even though IT budgets are expected to remain static, managers are working to ensure that the available resources are used in the best possible way. This will lead to a shift of resources from non-core IT projects to essential projects that help businesses grow and make money. New projects and moves towards newer technologies, including non-essential system and software upgrades, will receive lower focus. Some of the ways in which companies are looking to cut costs including outsourcing their non-core operations and focusing on their core operations. It is expected that management in many, if not most, large companies across the globe will continue to focus on some of the following areas:

  • Maintenance of existing systems: Systems that work are expected to continue to receive management focus since they have already proven their mettle. The legacy systems are generally core bread and butter systems that are the mainstay of operations.
  • Enterprise integration and Web services: This follows from the previous point about the need to maintain existing systems. Companies that have invested in disparate systems over the years (and decades), are going to examine ways of trying to integrate the system and work towards providing unified view to their partners and customers. This also includes Web-enabling the enterprise systems and EAI projects.
  • Finishing enterprise projects including ERP and CRM initiatives. Projects that are halfway through are going to receive focus since managements will be hesitant to throw the baby with the bathtub.
  • Cost saving initiatives: These include videoconferencing and VOIP (Voice-over-IP) deployments. Investments in these initiatives have proven to return tremendous benefits and companies will continue to forge ahead. Security: There is little doubt that information security will continue to remain a high-priority area for organisations. This area of IT will continue to receive a high degree of management backing.

    As the industry continues to remain sluggish, IT and technology companies are looking at out-of-the box solutions and service offerings to help their clients make money and save resources. Even though technological innovations and product version upgrades are slow moving, a few companies like Microsoft are taking in the big picture and investing for the time when the market will start looking up.

    Outsourcing, that has taken off in a big way will continue to receive the focus and attention of marketing managers and IT strategists alike because of the astronomical cost savings. Indians and Indian organisations need to continue to pay close attention to these trends in the US since our multi-billion dollar industry depends on identifying and harnessing these trends.





    About the Author

  • A Bio and profile of the author, Mohan Babu, can be found at his homepage
  • Mohan has authored a book on Offshoring and Outsourcing (Publisher McGraw Hill, India), a link to which can be found here
  • Mohan has also authored an Online book on "Life in the US," available for free download.
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    For FAQ, Trivia and Information on Life in America, visit the Ask-A-Desi section

    ©Mohan Babu: All Rights Reserved 2005

    Mohan Babu is an international consultant trying to find the ‘sweet spot’ where IT meets business. E-mail: mohan He is also the author of a recent book on "Offshoring IT Services"

    All rights are reserved. Mohan Babu ("Author") hereby grants permission to use, copy and distribute this document for any NON-PROFIT purpose, provided that the article is used in its complete, UNMODIFIED form including both the above Copyright notice and this permission notice. Reproducing this article by any means, including (but not limited to) printing, copying existing prints, or publishing by electronic or other means, implies full agreement to the above non-profit-use clause. Exceptions to the above, such as including the article in a compendium to be sold for profit, are permitted only by EXPLICIT PRIOR WRITTEN CONSENT of Mohan Babu. 

    Disclaimer: This document represents the personal opinions of the Author, and does not necessarily represent the opinion of the Author's employer, nor anyone other than the Author. This Article was originally published in Express Computers


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