With rising currency fluctuations, CIOs must re-examine their budgets

MUMBAI, INDIA: A new report by Gartner has some eye-opening revelations for the CIO community.

Specific to the frequency currency fluctuations, the research firm has cautioned the IT decision makers to come out of their comfort zones, and prepare themselves for the future challenges.

Take for instance last year. In the last one year itself, the Euro, Japanese Yen and Brazilian Real have dropped by about 20 percent against the US Dollar. And these frequent currency changes are taking a tool pricing of the tech products—making them more expensive. Under these circumstances, CIOs need to re-examine their budgets.

These currency fluctuations will affect all US products like servers, software and there will be no room for negotiation, as manufacturers will not sell products at a substantial loss, Gartner opines.

Roberto Sacco, Research Director, Gartner, believes that the trend is likely to continue till the end of 2016. “As the CIO, the most important action is to review your project plans through the second quarter of 2016. Assume there will be a 20 percent Euro price increase on Dollar-based IT products, and then make a plan to deal with it.”

He warns that the European software providers may also raise prices to maintain market rates.

According to Sacco, suppliers are currently re-pricing in local currencies. In an attempt to obfuscate this, they are also re-bundling—changing the mix of included modules, such as training and installation assistance. But CIOs may only notice the price shift when their contracts come up for renewal.

Sacco suggests that without reassessing priorities, CIOs could find themselves ambushed and out of pocket. “See where you can minimise the impact of these changes, look for other opportunities to cut costs and identify the risks, opportunities and funding that the plan exposes. Validate the plan with stakeholders; work with the CFO to close remaining gaps.”