IT - Innovation holds the Key

We all know IT fits in as support function in the value chain of most of the companies. In fact IT never constitutes more than 5-15% of the operating cost in most of the industries. Also during troubled times IT budget would be one of the first to get slashed in most of the companies. In spite of all this, IT unlike other support functions has the ability to impact the business directly by managing, controlling and creating new channels for growth.

Current crisis as always has been no different for IT; companies across the globe are now looking to cut their IT expenses. This situation will impact IT perception into two broad levels. The first will be those set of companies looking to slash costs through all possible methods. This can be through layoffs, cutting down on their budgets, slashing their production and research spending etc. This would have a positive impact on outsourcing/off shoring activities. However this approach would not be healthy in the long run as the outsourcing here would be focused only on cost cutting and not on value creation and innovation. The second set of companies will also be looking for cost cutting but with a slightly different approach. In this case the focus would be on methods to adapt their business, making it more flexible, generating new avenues for growth with the most cost effective method. This approach would lead to business methods like profit sharing with hardware and software service providers, Pay as you go model (SaaS), Global Delivery with focus on value creation. Innovation will continue to hold good for these companies and cost effective methods like virtualization, hosted services (pay as you go), 0% financing on products and services will be very much in need. IT companies will have to continue to build on innovation and anything which promises a significant ROI for the customers.

There is no doubt that the spending in IT would reduce but the future will hold good for companies willing to adapt and innovate with new and better products and services. IT as a function will continue to remain one of the most important links in the value chain of any company.