Effectiveness of Information System Downsizing: A Survey of the Top IS Users

The information system downsizing trend has been on the increase during the last five years because of extreme pressures brought about by the slow economy and intense global competition. The major benefit of downsizing is cost saving or cost avoidance, though reports of downsizing show that not all companies have achieved projected cost savings; while some have gained the savings predicted, others have cut short their efforts to downsize, the project ending in total disenchantment. Reports on a survey which uses companies, ranked as the top 100 information users. These “best users” were selected as the basis for determining: the motivation for downsizing; how cost effective downsizing is; and the degree of satisfaction after downsizing was attempted. Results indicate that cost saving and effective information technology utilization are the principal motives for downsizing. Less than 50 per cent of respondents indicated cost‐reduction due to downsizing, while the rest indicated otherwise or were not sure. Discusses downsizing strategies and identifies research challenges.