Global economic crisis not all gloom and doom for IT

CIO Summit 2008 kicks off with an encouraging forecast for IT amidst the global economic downturn.
Tim Dillon, IDC Australia's Associate Vice President of Research

Tim Dillon, IDC Australia's Associate Vice President of Research

Despite Australia's economy slowing in recent months in line with a global economic downturn, IT's increasing role in underpinning critical business operations will likely save the sector from feeling the full brunt of the credit crunch.

At the 2008 CIO Summit held in Sydney on Tuesday, IDC Australia's Associate Vice President of Research, Tim Dillon, said research has shown that fears of an impending global recession doesn't necessarily mean gloom and doom for IT.

He warned that consumer and business confidence is diving, inflation in Asia-Pacific is going through the roof as disposable incomes decline, and the expectation is that we're on the cusp of a recession.

"It's not going to be a quick bounce back, it's going to be a slow, steady state of recovery…although we're coming into a recession if you look at it from a historical context, where we've seen some fairly harsh economic shocks, our IT spending, our IT development and our initiatives continue to move forward," he said, pointing to the steady years of investment that followed the early eighties recession and the dot-com crash.

"You could be forgiven for looking at the economy, the news and the commentary that we're on the edge of a precipice about to fall off, but we're not…IT spending as a percentage of turnover and IT spending as a percentage of budget are going up because IT is fundamentally critical to the business."

IT spending with money outside of IT's budget is also increasing, further highlighting its significance to business, and is a trend that is expected to augment. According to IDC's Annual Forecast for Management survey, the perception of IT as a source of competitive advantage has risen 20 percent from last year.

Dillon's presentation to CIO's attending the event concluded with a forecast of the challenges CIO's are expected to face in the near future.

Managing the growth in data will be one of the most prominent issues for CIO's. IDC's EMC-sponsored survey on the digital universe found that in 2007 more data was created than we have the capacity to store – some 281 Exabytes, or enough to wrap the world seven times over if all that data was printed out onto A4 sheets of paper.

"By the time we forward a 1.1Mb e-mail, back it up, synchronise it across multiple devices, route it across the network, one week later it is 51.5Mb…We are creating more stuff than we can keep," Dillon said.

IDC predicts that by 2011 only half of what we create will be stored. However, security compliance and data regulation laws, such as the recommended re-write of Australia's privacy laws, will mean organisations will have to improve the way data is stored and accessed.

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"We'll have to get very intelligent about how we handle all this…right now we're struggling, research has shown that organisations waste a little more than one working month a year searching for information," Dillon said.

"We spoke to a thousand-odd organisations and looked at how they handle data, looked at their financials, market shares, performance. The ones that are automated and had an infrastructure - whether it's a UC infrastructure or a data infrastructure or whatever - supporting their business, they actually do better."

IT and business synthesis will also continue to increase in importance, as technology drives business innovation and creates value for organisations. Dillon cited the example of American electrical retailer Costco, whose stores customers could walk into and take a photo of a laptop, send it via MMS to Amazon, and receive the price of the same item in other nearby stores.

"It's about taking the business, the stock inventory, the price, the location and pushing that all together… IT services innovation, it sits across so many aspects of what we do as organisations."

Organisations should also turn to technology to fulfill the retail mantra that the customer is king. Here Dillon pointed to Continental Airlines in the US, whose tracking technologies allow for its frequent flyers to be issued with new check-in and boarding passes mid-flight if they are going to miss a connecting flight.

Reducing costs is still the number one CIO challenge for the future, with IT staff skills development expected to take a much higher role in the near future. The top 5 IT skills in demand, will be networking, ITSM, help desk support, database and enterprise application specialists.

The top four business issues that will take priority in the next 12 months, according to IDC, are: improving infrastructure to increase productivity; improving customer service; introducing new and/or improved products and services at a faster rate; and gaining a better understanding of customer requirements.