Nov 16, 2008

Am I the only person speaking to CIOs?

Well, here is what they have to say

(this was published in hebrew in The Marker... press here for link)


During the last 10 days most analysts firms (Gartner, Forrester, IDC ,Computer Economics, etc) have lowered their expectations for IT spending, but still expect it to increase next year. The net is full of articles that look like IT analysts are completely disconnected from what is going on. It looks like analysts and academicians (Society for Information Managers’ (SIM) study is also positive on 2009 budgets) are interviewing each other. When the CEOs of the firms talk about head reduction the analyst firms are talking about CIOs adding headcount. Here are links to some of the articles for this weekend:

IT Budgets Will Go Up Or Stay Flat For Most Companies In 2009

IT Leaders Confident About 2009 Budgets

2009 IT Budgets: Flat, but Not in Free Fall

IT Spending Outlook for 2009: Could Be Worse


I am sorry but STKI cannot put out positive signals just in order not to create panic.

Most CIOs are making two budgets for 2009:

1.       The one for at least the first 6 months is defensive, because of the unknown business environment. With defensive I mean cuts of about 10% on the actual 2008 budget. The budget includes monies for software/ hardware maintenance, needed enhancements, projects that help cut costs (IT and business), regulation.  In other words: Server Consolidation/Virtualization, Security/privacy  projects, Business Intelligence (BI), Business Process Management (BPM), Continuity Planning and Disaster Recovery (DRP), and surprisingly include monies for strategic planning of IT. This strategic planning is important because it is really the plan for the second budget (mainly architecture and processes).

2.       The second budget, includes new projects to help the business adapt to the post recession here to see the presentation. Most CIOs we talked to are sure the business environment  after the recession will be different than the pre-recession one. This will require changes in how their companies do business  and will require new applications  to support the new business processes. Some industries like banking and insurance will redo their core business software.They expect some of those projects to start in late 2009. 


Well, what does this mean for vendors:

1.       Longer sales cycles for fewer projects

2.      Temps/contractor business will shrink, but the high value part (experts in infrastructure, ERP and BI) will grow.

3.      Off/near shoring for maintenance and testing will continue

4.      New products should be introduced to the market for port-recesion projects

5.      Change the "product" strategy into a "service" strategy. Not everything will be in a "CLOUD" but definitely will be a "service"....on demand


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