TotalCIO

Jan 13 2010   7:14PM GMT

The elasticity factor: How CIOs are hedging IT budgets and hiring

Linda Tucci Linda Tucci Profile: Linda Tucci

I want to say one word to you. Just one word. Are you listening? (No, not plastics.)

I’ve been checking in with CIOs and analysts, following up on our annual IT salary and career survey to get the real-time read on IT budgets and IT hiring for 2010 and heard a variation on the jobless recovery theme: Elasticity.

Actually, the word came from Jack Santos, a former CIO and research fellow at Burton Group Inc. (soon to be Gartner Inc.). Santos was focused mainly on the sharpened interest from his clients in elastic computing models like cloud services for email and cloud platforms for software development. The notion of investing millions of dollars from IT budgets in up-front capital for solutions that might not show a benefit until much later — or, worse, become irrelevant in a volatile economy — doesn’t sit well with CFOs these days .

“If the company suddenly sees an increase or significant decrease in business, you’re stuck with those sunk costs,” Santos said. Better to “pay by the drink.”

But paying by the drink is not just a big theme for computing, as the Great Recession continues to grate on budgets. The topic of elasticity also came up over and over on the subject of IT hiring in 2010. Many of the CIOs I talked to — both those who had suffered deep cuts to staff and those who did not — indicated they’re using the pay-by-the drink model for humans, too. If business picks up and some of those delayed projects are put into motion, they plan to fill in with consultants or staffing services.

That doesn’t surprise Jerry Luftman, who directs the information systems program at the Howe School of Technology Management at Stevens Institute of Technology. “It looks like spending on internal staff will go down, but spending on outsourcing will go up,” he said, referring to findings from the SIM IT survey of CIOs he conducts annually for the Society for Information Management.

And, Luftman added, if companies do hire, many of them will choose the “rent-to-buy” route, offered by those IT outsourcing vendors, rather than go out and recruit people on their own.

Is your enterprise organization incorporating elasticity into its IT hiring or budgeting?

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