The state of IT: Primed for uncertainty

Thanks to shifts since the last downturn, IT is poised to weather economic turbulence with confidence

"If your business is growing and you need Oracle financials, you don't have to spend X dollars per CPU to get it," he says. "You can buy it in a license agreement that didn't exist five years ago. So you end up spending a few hundred thousand instead of a couple of million. I don't think CIOs or CTOs have ever been in as good a position as they are now. There are so many ways to do the things you need to do without spending the kinds of dollars you had to in the past."

Still, companies in cost-cutting mode will likely put off more ambitious IT projects for those that promise a faster return on investment, says Bob Riddell, senior director at Alvarez & Marsal Business Consulting.

"I think as the economy looks more frightening, we'll see companies saying, 'Let's tighten up our business case, make sure the projects we're doing have a measurable payback,'" Riddell says. "For example, instead of putting in a wireless network because it makes employees more creative and productive, they may say, 'Let's invest in new servers because we know our costs will go down.' That lends itself to smaller-scale, more modular projects."

But the easiest way to trim costs isn't necessarily the smartest, adds Riddell.

"Instead of slowing down the rollout of new projects, CIOs would do better to ask the businesspeople which projects have immediate business value, and then put all of their resources on the ones that will improve sales or cut costs," Riddell says. "It's better to leverage your IT spend[ing] rather than simply cut it."

Staffing: Lean, mean, results-driven teams

Another advantage for IT departments that suffered through the last downturn is that they're still lean and mean relative to their companies' other departments. When the ax falls, it's more likely to land somewhere else. Many lower-level jobs have been outsourced or offshored, leaving more highly skilled positions that are harder to fill. This is one of those rare instances where a recession could actually lead to greater job security.

[ Fora granular look at compensation trends, see: 2007 InfoWorld Compensation Survey: Personal gains and personnel woes and 2007 InfoWorld Compensation Survey: By the numbers ]

"One lesson we hope companies have learned is that they just can't cut head count as wildly as they have in the past," says Imran Sayeed, senior vice president of global industry solutions at Keane. "A recession comes, and the companies freeze hiring, then give one guy a job that used to be done by two or three people. It's bad news. That leads to attrition, depressed morale, and decreased productivity.

"If you do make cuts," Sayeed adds, "you need to be smart about it. You might not increase head count for pure Java development because you have better options. But thought leaders who understand their business and end-user requirements can't cut 15 percent across every department in IT anymore."

With today's shortage of tech talent, head-count reduction should be the furthest thing from a CIO's mind, says Rob McGovern, CEO of Jobfox.