Here's another sign that the tech sector is getting caught up in the current crisis: The events of the past couple of weeks have convinced many chief information officers that even forecasts calling for slowing tech-spending growth are overly optimistic.Late last week, the CIO Executive Board, a group made up of over 1,000 corporate chief information officers, polled its members to find out how the credit crisis was affecting their IT departments. The results are bleak. In past downturns CIOs felt as though they could nip away at their budgets, but this time they're looking at an overhaul.
Not only are they under pressure to shrink their budgets for 2009, but they're trying to cut costs before the end of 2008, says Joel Whitaker, senior director for the CIO Executive Board. "The turmoil on the Street is hitting home," he says. Now, 61% of CIOs are currently re-evaluating their 2009 budgets. Fifty-nine percent are trying to save money by renegotiating contracts with their vendors, and the same percentage are putting all nonessential projects on hold. Forty-nine percent are cutting the amount they spend on consultants and have restricted travel. (There aren't any historical comparisons, but Mr. Whitaker says that all of these are high.)
Almost a quarter of the CIOs surveyed say that they've introduced a hiring freeze, which Mr. Whitaker says is a particularly bad sign because it means that businesses may not have enough staffers on hand to finish already started projects on time. "Things are finding a new level," says Mr. Whitaker.
By: Ben Worthen
Wall Street Journal; October 7, 2008
