The CIO - Hero or Zero?

We had a pretty interesting discussion today on the road ahead for the software industry, given the state of the economy, and the resultant pressure on cutting costs. What will it mean for the CIO and IT departments in the world's enterprises?

There's one school of thought that predicts that the CIP will get his budgets squeezed and asked to cut costs. This will result in him being unable to ask for those endless customizations and fancy menu items for his IT and software needs with multi million dollar budgets, and instead go to cloud operators and a monthly budget and take what they have to offer out of the box. The days of extensive customization will be over, and business will realign itself to standard processes, using standard functionalities. SaaS will rule.

I think it may ultimately also turn out to be the opposite. Here's why.

CIOs will get budgets squeezed. They'll need to cut costs. They'll reduce expenses on infrastructure using virtualization. They'll cut frivolous and esoteric R&D. They'll consolidate and maximize what they already have. Companies will need new business strategies and smarter ways of running their operations. In such a scenario, the focus will be on higher customizations to align their softwares with their business processes. After all that's where the differentiation for these companies will come from. The CIO can be the hero. If he can use his budgets wisely to improve competitiveness. Asking the business to standardize is probably not an option.

With Obama's dictat today to cut down outsourcing and not give out American jobs, the focus might shift from outsourcing people to "buying solutions". BPOs might be hurt hard. However, I believe there's a huge playing field for companies like Persistent to take their innovative solutions out to the world and really create an impact. The next Indian wave may be just around the corner!