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Investment in IT could save the day for businesses

Stephen Pritchard
Financial Times
10 December 2009

Chris Steel, head of the North American IT Practice at PA Consulting Group, is quoted in the Financial Times on the impact of the downturn on IT spending.  The article looks at how in healthy economic times, businesses can make a case for spending on technology now, in order to save money later but in tough times, businesses are more likely to cut spending and postpone investments.

Businesses will have found that some of the larger-scale IT projects that were started earlier this decade will now have delivered most of the returns; the next phase is likely to mean focusing on running IT for less, rather than extracting more value from those earlier investments.

Chris Steel says: “There is mileage in ‘value mining’ from existing applications, but the benefits will be incremental not transformational.”

Mr Steel supports the view put forward by IT vendors, that spending money in a downturn does bring benefits later on. “There is plenty of evidence – not just in IT – that companies investing at the bottom of the cycle do better. We are seeing some strategic investment where people are taking a longer-term view,” he says.

At the same time, there is growing evidence that businesses are switching spending – perhaps permanently – to “lighter” projects that can bring a quick return on investment. Crucially, these projects often rely less on capital expenditure than the large enterprise resource planning or data warehouse schemes of five years ago.

Mr Steel points to the way companies have maintained, or even increased, spending on mobile working technologies in diverse sectors from financial services to healthcare.

You can read the article in full here


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