Despite heavy government intervention to allay further financial crises, many US and Canadian Information Technology leaders are anticipating budget impact from the downturn and should be preparing to manage with less, a recent poll by Info-Tech Research Group indicates. The poll, conducted over the past month, shows that 75 per cent of respondents are anticipating cuts, with expectations ranging anywhere from being "possible" to "very likely".

"IT budgets have not yet been cut as a result of what's happened on Wall Street, but business leaders expect cuts are coming," said Andy Woyzbun, lead analyst with Info-Tech Research Group. "Info-Tech has more than 23,000 clients who are primarily IT leaders from medium-range enterprises, and they are increasingly commenting on the likelihood of cutbacks."

When asked if they expect the economic situation to result in IT budget cuts, respondents said:
- very likely (32.6%)
- probably (20.7%)
- possibly (20%)
- unlikely (23%)
- don't know (3.7%)

Despite seeing the gathering storm, most enterprises have not taken pre-emptive action, something Woyzbun cautions may be an overly optimistic approach.

"Decisive action by IT decision-makers will contribute to the long-term sustainability of their companies, not detract from it," Woyzbun said. "From re-prioritizing corporate expenses to re-negotiating existing vendor and outsourcing contracts, tech companies that act now will be better prepared to weather economic challenges than if they take a 'wait and see' approach."

An Info-Tech Research Group study conducted during the summer showed that when enterprise IT departments have to cut over five per cent of their budget quickly, they're most likely to cut contract and full-time staff and trim salaries, plus eliminate training, development and team-building activities, actions which can negatively affect morale and performance. With more advance planning, companies can reduce costs through vendor management and contract renegotiation with less inherent risk.

"Clearly business and IT managers will be looking to achieve the most gain with the least pain if they are faced with budget cuts and since last-minute decisions usually translate into headcount reductions and project cancellations, it's better to make strategic plans now," Woyzbun concluded.