CA outlines priorities for IT investment in recession

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CA outlines priorities for IT investment in recession

CA kicked off its user event today with advice for IT chiefs and businesses on how to get through the current bleak economic climate, including the need to dramatically reduce the amount of IT budget dedicated to running the IT organisation.

At the opening press session of CA World 08 in Las Vegas on Sunday, Patrick Starck, corporate senior vice president and general manager for CA’s EMEA division, started off with the surprising notion that “nothing has changed” for firms despite the worsening financial situation and meltdown of the markets.

However, he continued: “One fundamental thing has changed – the pressure that companies are facing. When I say nothing has changed, I mean the type of pressure hasn’t changed, but the growth of the pressure has.”

Starck said that as a result of the recession, it is more difficult for firms to get investment and finance to sustain growth.

“A few months ago it was a financial crisis, but now the economy is in recession mode," he advised. “A mistake that was recoverable a few months ago could kill a company right now.”

A key impact of the current situation will be the introduction of more regulation, according to CA.

“All companies will have to face new regulation and update their systems to be compliant,” Starck said.

Starck cited three priorities for firms: reduce IT costs; optimise IT investments; and enable governance of risk.

“Sixty to 70 per cent of IT budgets are to run the IT organisation; 30 per cent is for new investment. No CIO could expect their budget to grow by two digits; if it grows by one digit that’s a great achievement,” he said.

“But the 70 per cent should drop to 40 or 50 per cent to enable the right investment to be made in new technology.”

Bjarne Rasmussen, senior vice president, Sales Acceleration, CA EMEA, said the current economic climate meant that firms needed to find the right area of IT to invest in to save costs. “Executives want to know where to spend money optimally and the return on investment of money spent on IT.”

Rasmussen cited virtualisation as one way of optimising investment. “In a computer room with 10,000 servers, 7,000 of them will be doing nothing at any particular time.

"Virtualisation means you can put three virtual computers onto one physical server,” he said.

Proper IT governance is also crucial in the current situation.

“With some applications it’s okay if it has a 10-second response time and only runs three days a week as it’s only internal employees who access this; but that isn’t the case with a core banking application,” Rasmussen said.

“A lot of companies have spare laptops everywhere and don’t know how much software they’re using, so they order extra or overuse and are in breach of their licensing.”

To aid firms in achieving better IT governance, CA announced it has teamed up with Cranfield School of Management on a research project to help put a value on corporate IT assets. The project began in September, with the results due at the end of 2009.

Joe Peppard, professor of Information Systems at Cranfield, explained that the research project will involve working with other business schools and universities around the world to assess best practice examples for measuring the value of IT; and carrying out case studies on organisations "doing interesting things in this area".
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