The recession and IT departments: a threat or an opportunity?

Recessions are never much fun for anyone (other than 'outplacement' consultants) - and tend to be particularly unpleasant for IT departments.

All non-essential projects are scrapped, redundancies are made, contract staff are slashed, budgets are squeezed - and all the while the CEO piles on the pressure to make the business more efficient.

In such a harsh environment, it's at first glance reassuring that 60 per cent of European companies are confident about the future, according to Gartner (see http://www.silicon.com/a55940 ). If business managers are perking up, can IT departments expect to benefit in the wake of their new-found optimism?

Sadly no. That confidence is not being translated into bigger IT budgets: a Merrill Lynch survey found that two-thirds of European CIOs expect their budgets to be flat or down in 2003.

And yet the Gartner research also found - instructively - that companies which spend above the average amount on IT in any given year tend to be more profitable than their competitors (see http://www.silicon.com/a55889 ).

Could it be that even in a recession, the long-term winners will be the ones who are prepared to devote resources to IT? One reason Cadbury's became the nation's favourite chocolate maker was its decision to continue advertising throughout the second world war. It spent bravely in a time of crisis, and benefited in a time of (relative) ease.

A plucky CIO might like to mention these survey findings to an understanding CEO - but with some caveats attached. IT and chololate are very different things after all. The Gartner research, for example, found that the where is as important as the how much - investing in a single area such as CRM, ecommerce, ERP, knowledge management or supply chain management did not generate significant benefits in terms of overall company performance (despite vendor rhetoric to the contrary).

And there's another thorny issue - the average length of time it takes to get ROI from an IT project. Datamonitor has joined in the survey frenzy and found that three quarters of tech chiefs expect to see a return on investment (ROI) within 'just' 18 months of a project implementation.

Just is their word, not ours, but clearly implies that a year and a half is a short timeframe when it comes to new IT projects. And it is. But in a recession, when businesses (even the confident ones) don't know for sure what's around the corner, it can look like a lifetime.

And some IT directors would argue that ROI isn't the best way to measure the impact of technology in the first place (which doesn't always go down well at board meetings), making the impact any project has on company performance rather hard to quantify (see http://www.silicon.com/a55083).

So what's the answer? Lobby your CEO to take a risk and go all out for those profits, or keep your head down and wait for a more generous economic environment? Should you go for the easy wins where ROI is quick and easily demonstrable, or is caution the best policy? Have you managed to drive through new projects recently - and if so, how did you get the budget? We want your views. Email editorial@silicon.com with your thoughts, and we'll keep you posted.