The Challenge Of It In Downturn

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Presentation on the CONFENIS 2009 Conference, Győr, Hungary

Presentation on the CONFENIS 2009 Conference, Győr, Hungary

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  • 1. The challenge of IT in Downturn Dr. Péter Fehér Corvinus University of Budapest & ITSMf Hungary
  • 2. Photo by Hilde Vanstraelen „In an economic climateb of slow and cautious growth, IT is under intense pressure to manage costs and ensure that spending is well aligned with business drivers” Stevie Sacks, Computer Associates 2004
  • 3. Impact of the crisis 2008-2009 Source: Bryan, L. Hoffman, B. (2009) How managers should approach a fragile economy, in: McKinsey Quarterly, September, 2009
  • 4. Stabilisation 2009? Source: Bryan, L. Hoffman, B. (2009) How managers should approach a fragile economy, in: McKinsey Quarterly, September, 2009
  • 5. Picture by Ruth Livingstone Crisis reactions Cost reduction Debt management Supplier management Customer reliability Reducing organisational complexity Increased controlling and visibility „…take the issues seriously, you have not taken before. Do, what you haven’t done, yet…” György Bőgel, CEU
  • 6. Cost cutting efforts
  • 7. Value creation through IT Business cost reduction Time-to-market ration, quality, efficiency Business innovation with IT
  • 8. „Information technology is seen as vital to business innovation, but the IT function is not” IT is critical for business innovation IT function is a driver for business innovation Yes No IT function is the main initiator of business innovation 0% 20% 40% 60% 80% 100% Sevillia, O. – Nannetti, P. – Monnoyer, E. (2008) Global CIO Survey 2008 – The Role of the IT Function in Business Innovation - Innovator vs Operator, Cap Gemini
  • 9. IT has a significant role in implementing business innovations of 5 disagree; 20% strongly agree; 35% neither/both; 35% agree; 10% 3,6 IT has a significant role in implementing business Source: Survey results 2009 innovations
  • 10. Our IT function is the main initiator of innovation strongly agree; 5% strongly of 5 disagree; 15% agree; 20% disagree; 20% neither/both; 40% 2,8 Our IT function is the main Source: Survey results 2009 initiator of innovation
  • 11. Cost reduction (2008 Q2) Sorozat 1 100% 90% 80% 70% 60% 50% 40% Sorozat 1 30% 20% 10% 0% Kategória 1 Kategória 2
  • 12. Cost reduction (share of organisations) No Yes ~80% Source: Survey results 2009
  • 13. Is your IT budget going up or down in real terms comparing to last year? (2009) 40,00% 35,00% 30,00% 25,00% 20,00% ~20% 15,00% 10,00% 5,00% 0,00% Down Down Down Static Up Up Up (> 20%) (10-19%) (1-9%) (1-9%) (10-19%) (> 20%) Source: Survey results 2009
  • 14. Cut costs, but where? Development; 45,00% Operations; 55,00% • Human resources • Business demand • Suppliers specification • Sourcing models • Conscious project • Risk management management • Operation costs • Project portfolio management • Processes • Business case analysis • Open-source solutions
  • 15. Cost cutting expectations 2008 Q2 Sourcing models
  • 16. Short term reactions 1 100,00% 80,00% 60,00% 40,00% 20,00% 0,00% Stop new Project starts Postpone Renegotiate Stopp or limit Layoffs Stop Decreasing hiring based on procurements supplier development consulting salaries and business case contracts projects activities benefits Already accomplished Planned Not expected Source: Survey results 2009
  • 17. Short term reactions 2 100,00% 90,00% 80,00% 70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% Project starts Postpone Renegotiate Stop/limit Stop new Stop Layoffs Decreasing based on procurements supplier development hiring consulting salaries and business case contracts projects activities benefits Already accomlished Planned Source: Survey results 2009
  • 18. Planned projects 80,00% 70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% Operation Process Development Changing Developing Using open- IT risk optimisation management of IT Service sourcing project soruce management Management models management solutions Source: Survey results 2009
  • 19. Contraversial view of IT "IT investments deliver more value to a company [...] - by creating new efficiencies and increasing revenues - than any savings gained from traditional cost cuttings." Kaplan, J. - Roberts, R.P. - Sikes, J. (2008) Managing IT in a Downturn - Beyond cost cutting, in: McKinsey Qualterly, Fall 2008, pp. 66-71.
  • 20. Crisis management results • Survive • Lack of resources • Rethink current practice • Waiting for better times
  • 21. Thank You! Dr. Péter Fehér pfeher@informatika.uni-corvinus.hu Corvinus University of Budapest Department of Information Systems ITSMf Hungary