CIOs Slowly Pry Open Dusty Wallets

The economic hardships hitting businesses worldwide over the last several months have compelled may an IT department to steer costly new initiatives into indefinite holding patterns. However, these stalled technology upgrades are beginning to find newcorporate support. A new survey by Robert Half Technology revealssome organizations are finally planning to implement projects that earlier had been shelveddue to the recession.

More than one-third (37 percent) of CIOs interviewed said they weremoving forward with post-recession plans to implement software andhardware upgrades that had been deferred due to a soft economy. OtherCIOs foresee moving forward with virtualization projects (16 percent)and Web site design initiatives (16 percent) as conditions improve.

The delayed upgrades will occur over the next year. These plans tofund delayed projects are also bringing returned business tothird-party vendors. Job seekers as well are finding renewedopportunities from companies eager to take on more staffers to carry out theupgrades. These new positions range from outright new hires, contractto hire and project consultants.

“CIOs have a choice of when to do operating system upgrades to Windows7. But they have no choice but to do it. Managers didn’t cancel theseprojects but deferred or delayed the upgrades. We never heard the wordcanceled,” Dave Willmer, executive director of Robert Half Technology,told the E-Commerce Times.

Survey Highlights

The national survey results are significant because it shows acorporate trend as companies start into a recovery mode following 18 to 24months of cutbacks of staff and equipment resources, Willmerexplained. An independent research firm conducted the IT survey basedon telephone interviews with more than 1,400 CIOs from companiesacross the United States with 100 or more employees.

Pollsters asked CIOs, “Which IT projects, if any, did you put on hold in2009 due to the economy that you plan to implement post-recession?”In order for the survey to be statistically representative, the samplewas stratified by geographic region, industry and number of employees.The results were then weighted to reflect the proper proportions ofthe number of employees within each region.

Software or hardware upgrades marked the largest category of upgradesput on hold at 37 percent. Virtualization and Web site design upgradesshared a distant second at 16 percent each.

The third most prevalent category put on hold was projects involvinginternal collaboration and/or technology tools, at 12 percent. Nearlythe same result occurred for cloud computing upgrades, at 11 percent.

Company-branded social media sites tallied 9 percent. CIOs also listeda variety of other technology-related projects for an insignificant 1percent.

Technology Swap

Key to the upturn in upgrades is the delay many companies haveexperienced in dealing with replacing aging equipment, suggestedWillmer. Typically, hardware life cycle is three or four years. When things gettough, they can defer 12 to 18 months, he said.

“The PC vitalization will see hardware upgrades along with OSupgrades,” said Willmer.

The economic slump has led some companies to turn to alternativeoperating systems. He does see some companies exploring Mac or Linuxmigration, but SMB companies are his company’s client base, Willmersaid.

“At the end of the day, it’s still a Microsoft environment,” heconcluded regarding the amount of OS upgrades to Windows 7 taking place.

Work Underway

Catching up to mobile trends is a primary necessity for many firms.For example, many of his customers need support for mobile devicessuch as Windows Mobile and BlackBerry, according to Joel Bomgar, CEOand founder of Bomgar, which develops remote supportsoftware. However, unlike Willmer, Bomgar sees a larger shift to alternative OSestaking place.

“We’ve also seen a significant uptick in the need to support both Macand Linux in the enterprise. It definitely isn’t a Windows-only worldout there anymore,” Bomgar told the E-Commerce Times.

The survey results may also contain some hidden gems that were notanticipated. For example, the information portrayed in the survey doesnot reveal changes in the way organizations buy their services.

“It demonstrates where we see the greatest areas of CIO interest. Forexample, our pipeline has been building for the past six to 12 months,fueled by an increased interest in managed services over pure staffaugmentation,” Beni Lopez, CEO of tech support firm Softtek, toldthe E-Commerce Times.

Financial Pipeline Swelling

His customers are increasingly more interested in paying fordeliverables and compliance measured in Service Level Agreements(SLAs) than in paying for time and effort, noted Lopez. This increasedinterest, however, has come with longer sales cycles. He sees thisoccurrence as a natural consequence since moving from staffing to SLAservices implies a deep assessment of the portfolio of outsourcedservices.

Catching up on technology upgrades poses other benefits. These includehuge opportunities for increased productivity and cost efficiency intimes of recession, according to Lopez. These opportunities tend tobe overlooked in times of economic abundance.

“In the financial services sector, the focus has traditionally been ontime-to-market. However, by paying more attention to productivity, thefinancial services industry can recover losses and maximize their ITbudgets,” he said.

An Opposite View

If an IT organization has had an infrastructure upgrade on hold forthe past two years, its executives may want to rethink thingsbefore diving in. Plans made that long ago may not be the best direction to take now. Better options from technologies such as cloudcomputing may have changed the upgrade landscape.

“Chances are, the capacity demands that much IT Infrastructure wasunder has been reduced through cost-cutting activities,” ScottArchibald, a consultant with Bender Consulting, told the E-Commerce Times.

Many aspects of cloud computing are still maturing, he noted. Thatprocess could take three to seven years. Still, cloud computing shouldcause any IT organization to re-examine and even re-think their long-term strategy.

“Hopefully, during the past couple of years, IT organizations took thetime to work with their vendors, become more efficient with their owninfrastructure and processes while also evaluating the technologylandscape,” said Archibald.

Take His Tips

CIOs might consider a list of tips Archibald offered before movingforward with delayed upgrades:

  • Quickly re-examine the company’s strategy and the impact thatcost-cutting, cloud computing and other variables may have had on thatstrategy over the past couple of years.
  • Question whether the company really needs the upgrade aftertwo years of operating well without it. This is true for both softwareand hardware.
  • For capacity upgrades, check recent demand trends.

Many business leaders believe that the economy is not out of thewoods yet. So upgrades should be planned in manageable phases whereyou don’t get caught in a no-man’s-land before the project is 100percent complete, according to Archibald.

“Depending on where your software vendors are in their releaseschedules, you may want to wait for the next release. I have a rule ofthumb to never deploy a ‘.0’ release — too many bugs,” he said.

No Hiring Heyday

The survey also revealed some good news for job seekers. It showed aincrease in fourth-quarter contract, full-time placement and truehiring, according to Willmer.

“It’s not yet a floodgate but a steady, healthy increase in hiringactivity. There is no blank check as companies take on the upgrades,”said Willmer. “It is a process of efficiencies. It starts costing youmoney not to do it. You need staff to do the upgrades. A lot ofcompanies are looking at contract to hire and project work.”

Bomgar has added significant headcount in the development, QA,enterprise client management and support divisions. All of these arefunctions that are impacted when more enterprise deals are inpipeline, pilot and implementation, explained the Bomgar CEO.

Outsource Reinforced

“There’s been a movement outside the IT environment to outsourceservices,” Ron Burns, CEO of ProtonMedia, told the E-Commerce Times. His firmdevelops virtual collaboration platforms.

In part, this trend is resulting from what Burns called a disconnectbetween business goals of leaders in an organization and theirexpectations of the last round of upgrades.

“‘Unfulfilled promises’ is the term I hear all the time,” said Burns.”The traditional selling point of the IT function now is going tooutsourcing.”

1 Comment

  • Jack, great story and thanks for including my comments.

    An additional observation on this. While many companies have outsourced IT services during the recession, it’s siloed their IT strategy. With IT investments starting to come back online, companies are naturally looking to centralize their IT tools and processes. Because let’s face it, there’s no better way to manage your IT strategy than to have it centralized in-house.

    -Ron

    http://blog.protonmedia.com

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