Many banks and brokerages have been forced to lay off many workers due to the financial crisis, but according to the IBMC (International Business Machine Corp) 200 CIO’s have said they will increase spending in information technology. Along these lines IBM has said that in their studies 21% of companies plan on increasing spending for information technology by 10% while 18% of companies polled plan on increasing spending more than that. For the rest of the companies 20% said they will cut back on IT while the rest said they will keep it the same. These stats were for the 2008 year, for 2009 it is predicted that 41% of all companies information technology budgets will increase, 13% decrease, and the rest being unsure or keeping it the same. The poll was on the budget that they spend for computers, software, and IT services. A study by Goldman Sachs said that the largest 30% of firms do plan on cutting back IT expense.
According to an article this is due to many companies outside of Wall Street having remarkably strong balance sheets so they are able to increase or flat line IT spending. This article talks about how an economic recession is a time to make investments in IT.
Having small to medium companies not in the top 30% largest companies that have solid balance sheets amidst this crisis have a huge advantage when this recession is over. The further ahead of the competition you become in the technology apartment the better off you are. Since the highest IT priority for big financial firms is systems for improving risk management having a company it is not necessarily a great business decision to be cutting back given the state of Wall Street at this point. Another huge part of their budget was systems to improve the analysis of customers and profitability. By cutting back in these areas they are not able to get as good of a picture of each customer and how to expand their business as those companies that may be smaller that have increased or kept IT spending to further themselves and compete more.
http://proquest.umi.com.proxyau.wrlc.org/pqdweb?index=0&did=1507967151&SrchMode=1&sid=1&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1223413527&clientId=31806”
“http://web.ebscohost.com.proxyau.wrlc.org/ehost/pdf?vid=10&hid=114&sid=d8151851-4cd2-43b3-babe-cdafc24340c6%40sessionmgr107
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2 comments:
I think that this is a really interesting topic, especially considering that we will soon be entering the job market. Assuming that most of us are specializing in either IT or finance, it may turn out to be applicable to our futures in these fields.
It makes perfect sense that companies would put any extra cash into systems that further their profitability or efficiency in the market. These are obviously areas for investment that will pay off in the future if they successfully ride out the ups and downs of the economy.
Increase spending on IT is always good news for students like us majoring in IT. In spite of that, an increased spending patter towards IT even during this financial crisis is meaningful. Increase spending in IT would help to ease the unemployment for some extent. That is much more like a diffract effect, however, there are many more advantages of increased spending on IT. IT can open new doors, develop strategic ideas, and create new innovations which can help our economy to overcome this financial mess.
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