CIOs Uncensored: Some Still Bullish On IT Budgets, Others Not

For this week's feature story, "How CIOs Are Dealing With A Tough Economy", my colleague Marianne Kolbasuk McGee and I contacted many CIOs, IT managers, executives, consultants, and interested observers about the effects of the struggling economy on technology budgets and business plans. Not all of their comments made it into the feature story, as interesting and insightful as they are.

For instance, many are very bullish. Richard Jones, the CIO of Fiserv, which provides transaction processing for the financial services industry, says the services Fiserv offers are still very much in demand in a weak economy. "People still write checks, go to ATMs, pay their bills," he says.

Angelo Mazzocco, CIO of Progressive Medical, which markets products and services to health care providers, agrees, and for the same reason--the industry his company's in. "It's really not affecting us, other than the let's-watch-our-mileage, let's-do-local-instead-of-global-meetings," he says.

"We're hurting but we're still making money," says Eddie Chu, VP of business processes and IS for the Minto Group, a real-estate developer in Ottawa. In fact, Chu, who was hired just last winter, is preparing his revised IT budget--double what it had been--and "working with the CFO to mitigate that sticker shock for the shareholders," he says.

Less sanguine perhaps, but more insightful for it, are comments I received by e-mail from Denis O'Leary, former CIO of JPMorgan Chase, who is now a consultant and an independent investor. He's also a member of InformationWeek's Editorial Advisory Board. It was from a discussion at our recent board meeting in Napa Valley that the feature story was born. O'Leary's comments deserve to be reproduced in full:

"In financial services--and many other industries (airline, auto, retailing, housing)--the current pressure on expenses is nothing short of acute. While things have deteriorated notably since our Napa meeting, they still remain well short of bottom from my perspective.

"I would expect a fair number of firms to put all non-mission-critical IT spending on hold at this stage. Mission-critical would include daily operation of the core network and data processing, compliance systems, key risk management systems, disaster recovery, and security. Numerous data mining and CRM projects will likely slow or stop, as will upgrades and efforts around visualization--unless the payback period is within 12 months or less.

"While many see this period as an exceptional credit cycle event with an energy twist, in financial services it is more fundamental. I believe the profit margins and revenue sources of the past decade have shifted fundamentally--meaning more substantial decisions about strategy and operating architecture are required.

"A migration to a far more simple business and back-office design, with increased use of third-party processing, is likely to occur. For IT, fewer vendors doing fewer things is the call of the next decade in financial services."

That's a lot to think about. I'm glad I got it in.

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