Gartner advises IT companies to take cost-cutting steps quickly

Hanover: Research firm Gartner says IT companies in countries where gross domestic product (GDP) growth is projected to grow less than two per cent in 2008 are advised to prepare for IT cost-cutting now and not to wait until a recession is officially announced to cut their spending.

"We believe that economic factors in the US have deteriorated to the point where action is required and are advising businesses to prepare for cutting IT costs and follow a six-step plan for complying with cost-cutting," says Ken McGee, vice-president and Gartner Fellow.

Last October, Gartner recommended that organisations should prepare two IT budgets for 2008, the first reflecting guidance already provided by senior decision makers and a second 'backup' budget assuming the need to cut costs in response to the arrival of a slowdown.

Gartner believes those responsible for IT budgets can expect to receive mandates from senior executives to cut IT costs as part of an enterprise-wide cost-cutting programme. It recommends that organisations begin establishing ground rules for complying with such a cost-cutting mandate by following a six-step plan.

Gartner advocates pre-paring a cost-cutting team now rather than waiting for official notification.

Gartner recommends that top performers are assigned to lead IT cost-cutting programmes. Year-end financial bonuses should be based exclusively on the amount of money the team saves in 2008.

He says cost-cutting teams need to assume that everything that was done in the past was the right thing to do at that time and not dwell on earlier decisions. They should identify the target for cost-cutting, perform the appropriate action and move on.

Cost-cutting teams need quick access to legal guidance so that the team can arrive at cost-cutting solutions without increasing the liability of the company.