Spending IT Budgets wisely (page 1 of 3)

Spending money on technology has become a game of tactics, strategic moves and potential risks for businesses throughout the world. Globally, technology spending has slowed in response to the current global economic downturn.

In Europe, companies are operating in a weaker economic environment than their North American counterparts - European 2002 gross domestic product (GDP) growth is projected at 1 percent to 1.5 percent, versus 3.8 percent in the US. Throughout 2001 and 2002, achieving cost savings was one of the main issues for Western European organisations and remains a major objective through into 2003.

Companies looking to achieve cost savings have reacted by cutting IT budgets and overall, there appears to be little forward momentum in European IT spending, with analyst predictions varying from stagnant to 1.5% growth through into mid-2003, when they project a slightly more optimistic outlook .

'Bare bones' approach creates new buying patterns

For the moment, however, the majority of IT executives are not getting any more money, which means they have to make the most of what they already have and be cautious about further spending. Any request to the Board to sign off new projects will come under close scrutiny for essential value to the business.

In the wake of the slowing economy, a "bare bones" approach to technology spending has taken over and created new buying patterns, with the focus on selecting the most affordable option that can deliver the quickest return on investment. This is taking the form of smaller, highly measurable projects and, increasingly, an interest in outsourcing IT functions, to boost efficiency and save money.

Technology that keeps a business up and running while also giving it a competitive edge will be most sought after. In reviewing the current business landscape, Oracle recommends a technology progression path for those wanting to stay ahead of the curve yet save money.

Navigating Technology choices

The most crucial step in the process of assessing the value of an IT infrastructure to the overall business is to understand the business requirements and to map technology investment to them. Is a company looking to expand into a new market? Or diversify into a new product or industry sector? Does it need to streamline its manufacturing capabilities? Whatever the requirements, the budget available will have to suffice.

With a bewildering choice of technology on offer and several potential expenditure options for an organisation's limited IT budget, this initial definition of requirements is the most important step in ensuring future success in meeting short term return on investment goals and long term business goals of competitive advantage, reduced IT complexity, etc.

There are three key steps to get on the right path to success in maximising IT spend and which make the most of the IT infrastructure already in place:

Step 1: Consolidate your information
Many businesses operate a disparate array of databases, file or email systems, each needing management and administration. In this scenario, most companies don't actually know what information they have, as their most valuable assets sit in isolated departmental pools of data. Unstructured data is not productive and adds little value to a company's bottom line.

IT management teams should consider consolidating all of the company's data into one single database.