Recession revisited: Will this time be different for IT?

As the US economy turns downward, CIOs are preparing in dramatically different ways than the last time

The virtualization push

Server, storage and even desktop virtualization opportunities are also driving many companies to up their investments in these areas in order to optimize their operations and drive down their costs. The threat of a recession only supports these priorities.

Prior to the launch of its server virtualization efforts three years ago, the utilization rates of Lowe's clustered Intel servers were in the "abysmally low" 10 per cent to 15 per cent range, says Stone. Since the company's virtualization efforts kicked in, server utilization rates have soared into the 85 per cent to 90 per cent range, and the retailer plans to continue those programs through 2008, he adds.

Over the same period of time, CompuCredit has consolidated 50 per cent of its server base while saving a few million dollars by sidestepping server purchases and related hardware and software licensing costs to support the company's prior business growth, says Sacchi.


Meanwhile, IT executives in many other industries are anxiously waiting to see what effect the economic slump will have on their businesses and IT spending plans.

"At this juncture, it's a yellow-light phase," says Jerry Luftman, associate dean and distinguished professor at the Stevens Institute of Technology. "Many CIOs aren't being aggressive with their IT spending but they're not cutting back yet," he adds.

"We're waiting here with baited breath," says Michael Israel, senior vice president of information services at Six Flags, a theme park company whose venues begin opening this week.

Although the company has cut its IT budget for systems at its parks by 50 per cent compared with last year's, it has increased its back-office spending plans by the same proportion, to cover planned upgrades to its Great Plains accounting system, and food and retail inventory systems, Israel says.

For now, Six Flags' IT spending plans remain "pretty good for this year," he says. "But as the season rolls out, we'll see" how the economy affects IT spending, he adds.

So buckle up. The roller coaster ride has just begun.

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