The economy may be slowly improving but budget cuts for many IT departments are here to stay for a little-while longer at least.

PHI Inc CIO James Quinn, like other IT executives, will be heading into 2011 with a list of worthy projects that the global helicopter transportation company will nonetheless be deferring - at least for the time being. But there are certain kinds of projects you won't find on that hold list.

Key among them are projects that are "customer-facing or anything that saves dollars," says Quinn.

"Anything that involves process improvements and anything that can show a fairly fast ROI is also getting pushed to the front."

On the expense side, PHI will continue to reduce costs by outsourcing "keep the lights on" operations, even farming out the maintenance of production databases. The company is also renegotiating its agreements with just about all of its IT and services providers, including those whose contracts haven't yet expired.

"We're being very aggressive, going back to vendors to work multiyear deals in exchange for cost reductions today," Quinn explains. "We're seeing our customers do that to us, and we're doing the same thing with our vendors."

IT shops in all industries are approaching 2011 the same way Quinn is: They plan to vigilantly manage flat budgets and further slash already significantly reduced costs. Indeed, IT executives who responded to a recent Forecast survey by PC Advisor's sister title Computerworld, ranked budget constraints and economic pressures as their Number one challenge in the year ahead. And six out of 10 respondents indicated that even though the economy appears to be improving, the cuts they made in the past 18 months or so will become permanent.

Even more notable is that the projects IT executives say rank highest on their 2011 priority lists are those designed to cut costs even more. Most of those projects fall into three broad categories: revamping and then automating various business processes; consolidating data centers and implementing technologies that help save money, such as virtualisation and cloud services; and outsourcing or using software-as-a-service providers for routine tasks. The idea is that by automating and outsourcing the work that just keeps the lights on, IT departments can focus their valuable staff resources on innovative projects designed to grow the business.

But don't expect a big run-up in IT job openings. For the most part, CIOs don't expect to invest in additional full-time staff next year. Rather, the focus is on investing in new technologies that will automate operations and lower costs - and decrease the need for additional employees. The technologies that survey respondents said they are piloting or beta-testing are server virtualisation, desktop virtualisation and mobile and wireless devices.

"Even in this downturn, we're seeing a significant investment in technology," says Adam Noble, CIO at GAF Materials. So are his CIO peers, he says. "They're not hiring, but their investments are going up."

NEXT PAGE: Investments in some firms are at a standstill

  1. Economising will continue through 2011
  2. Investments in some firms are at a standstill
  3. Push-button processes
  4. Running for cloud cover
  5. Austerity yields new appreciation for IT