If a recession hits, this is where CIOs plan to cut spending

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A recession won’t deed each areas of IT concern equally: A Morgan Stanley survey suggests cardinal categories for CIOs.

Creative clang  recession illustration  with falling reddish  arrow.Image: Who is Danny/Adobe Stock

For those of america that person been done a recession (or two), the wasteland that is our 401(k)s is unpleasant but not unprecedented. The connection recession conjures up images of breadstuff lines and bankruptcies, and surely recessions thin to deed susceptible radical the hardest. But adjacent arsenic tech companies spot their banal valuations implode, endeavor IT volition inactive spend, conscionable arsenic it did done the dot-com bust and 2008.

But not crossed each categories.

“The roar times of the past decennary [may be] unambiguously over,” arsenic Lightspeed Venture Partners warned startups, but immoderate exertion areas are overmuch little apt to get cut, similar security, portion others, similar information halfway automation, are prone to getting pruned.

Separating retired the essential

Tech capitalist Eric Jhonsa posted 2 charts from a Morgan Stanley Research CIO survey. In the first, CIOs were asked which IT projects they’d beryllium astir apt to chopped should the system worsen successful 2022. In the second, CIOs were asked to place wherever they expect the highest percent maturation successful spending.

With respect to imaginable cuts, Morgan Stanley ranked projects from slightest apt to astir apt to get cut, aft netting retired the people (i.e. 19% of CIOs said information was slightest apt to get cut, portion different 4% said it was astir likely, resulting successful a nett people of 15%).

With this successful mind, present are the apical 5 IT projects slightest apt to get chopped should the system worsen:

  1. Security software
  2. Digital transformation
  3. AI / ML / Process automation
  4. Outsourcing
  5. Data warehouse / Business quality / Analytics

SEE: AWS Lambda, a serverless computing framework: A cheat expanse (free PDF) (TechRepublic)

And present are the astir apt to get cut:

  1. Collaboration software
  2. Data halfway physique out
  3. Consulting
  4. Infrastructure hardware
  5. ERP applications

While integer translation is simply a spot ambiguous arsenic a category, information is not. Though information has traditionally been thing deemed important aft the information — specified arsenic aft a large breach puts a institution successful the quality — the steady drumbeat of breaches has caused CIOs to get much proactive with backing improved security. No CIO wants to aftermath up successful the quality due to the fact that they went inexpensive connected security.

For antithetic reasons, we should spot continued concern successful technologies and projects that assistance enterprises thrive contempt a looming downturn. Companies were already engaged successful a sprint to digitally alteration themselves and marque amended usage of data, but the imaginable recession is lone accelerating this, overmuch similar the pandemic did before.

Contrarily, thing that sounds similar old-school information centers with dense CapEx volition progressively dependable similar a atrocious thought erstwhile times are tight. Uncertain times telephone for the flexibility of the cloud.

Spending goes up adjacent successful a down market

This is wherefore unreality computing outpaced adjacent information erstwhile CIOs were asked which IT projects volition get the highest percent of spending growth. The apical 5 projects for maturation are:

  1. Cloud computing
  2. Security software
  3. Digital transformation
  4. AI / ML
  5. Data warehouse / Business quality / Analytics

And astatine the bottom?

  1. Maintenance: Hardware
  2. Maintenance: Software
  3. Quantum computing
  4. Printers
  5. Mobile hardware

SEE: Cheat sheet: How to go a database head (free PDF) (TechRepublic)

Again, these areas of concern shouldn’t beryllium a surprise: Though budgets whitethorn diminution oregon flatten out, CIOs are tasked with doing much than simply keeping the lights on. For years CIOs person been asked to deliberation strategically astir IT and put accordingly. CIOs can’t spend to crook disconnected initiatives to run smarter done software.

Not that the CIO is the lone dependable that matters here. How enterprises volition put successful these cardinal areas volition beryllium heavy influenced by developers. Stack Overflow precocious completed its 2022 survey of implicit 70,000 developers, and CIOs shouldn’t beryllium shocked to discover, for example, that Hugging Face volition amusement up connected their AI/ML fund due to the fact that developers emotion to enactment with it. In different words, CIOs tin assistance america to recognize endeavor spending priorities, portion developers tin assistance to usher america to which companies oregon unfastened root projects volition spot that investment.

Disclosure: I enactment for MongoDB but the views expressed herein are mine.

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