Over the last few months, the number of companies issuing warnings with respect to current and future business performance has turned into a flood as economic growth slows. Once-high-flying stock market stars such as Lucent, Dell, Motorola and even mighty Intel have all acknowledged that estimates of future business growth were overly optimistic. In many cases, these announcements have been followed by promises of significant cost reductions and layoffs.

We have been here many times before. However, the circumstances in which information technology (IT) finds itself this time appear a little different, and that poses an interesting challenge. In past downturns, the standard operating procedure has been to dramatically curtail selling, general and administrative (SG&A) spending and severely limit spending on projects. This usually means hiring freezes, tight time and expense (T&E) controls and the cancellation or deferral of IT projects. Today, many senior IT executives are caught in a tough situation. Along with their colleagues in finance, human resources and other business support functions, IT is under pressure to reduce costs. However, at the same time, the rest of the business is predicating its own cost or productivity improvements on the deployment and leverage of new technology, be it through completing full deployment of enterprise resource planning (ERP) or customer relationship management (CRM), Web-enabling core business processes or other such technologies.

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