CIO Prescription: How IT Is Riding Out The Recession

Some companies are cutting their IT budgets in response to the recession, while others are focusing on smart spending to be ready for the recovery.
It's All About The Economy
Business technology leaders can't afford to get caught flat-footed by how fast this economy, and a company's health, could change. Think a transformational project is so vital it can't possibly get delayed? In our accompanying story on p. 30, renowned business adviser Ram Charan warns, "What criteria you were using in the fall of 2008 to call something transformational may have become irrelevant."

Ogihara America, a Michigan-based Tier 1 supplier of fenders, doors, and other parts to automakers, is living this reality, fighting through one of the sharpest drops in vehicle sales in decades. It's no time for half measures. "We've had to scale back drastically," Ogihara IT manager Dennis Henning says. The IT budget is about one-third what it was a few years ago, and the staff is down from nine to three. It shelved plans to migrate storage to a SAN and refresh servers, desktops, and networking gear, because of the cost and lack of staff to implement them.

Automation's one answer to dwindling staff: Henning started using Innovator, open source product life-cycle management software for which Ogihara pays an $84,000-a-year subscription to Aras for upgrades and support. Ogihara started using the service about two years ago to manage product development quality; today, it's using it to track design changes that had been tracked manually on spreadsheets by "a second level of the organization" that it no longer has. Henning's also considering replacing its 250 to 270 PCs with virtual desktop thin clients that access desktop software from the data center, leading to fewer repairs and lower support costs.

For ongoing analysis of these issues, see our Global CIO blog Global CIO
No matter what the company or industry--autos or airlines, hotels, casinos, or insurance--the pressure is on business technology leaders for results. In Forrester's survey, 67% cited "getting application projects done on time and on budget" as critically important, compared with just 29% in 2007. In this economy there's little room for error--or delays. Yet for tech leaders who deliver, their companies' prospects and their IT organizations' reputations are going to look a lot better heading into any upturn.

-- with Mary Hayes and J. Nicholas Hoover

Illustration by Chris Clor

This story was modified on Jan. 22 to correct the annual revenue for Hologic.

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Ram Charan On The CIOs Role