European CIOs cautious about IT spending for 2012

23 Jan 2012

Fewer organisations across Europe plan to raise their IT spend and on average are drawing up cautious budgets for IT hardware, software and services spend in 2012, new analysis from IDC reveals.

In November 2011, IDC carried out a “Pulse” survey of spending intentions among 590 organisations in six territories across Western Europe.

Key findings include:

  • Some 40pc of organisations expect to raise external IT spend on hardware, software and services, and about 17pc expect external IT spend in 2012 to decline.
  • The remainder expect to hold spend steady. Only a quarter of those planning to increase spend in 2012 are planning to raise spend by 5pc or more.
  • In 2011, some 43pc of organisations raised their external IT spend over the whole year, according to survey respondents, while around 20pc lowered their spend.
  • Western European organisations are therefore heading into 2012 with external IT budgets that tend on average more toward stasis when compared with actual IT spend patterns in 2011.

External IT spend budgets down year-on-year

“These spending plans may seem optimistic at first sight, given the economic environment, but in fact total external IT spend budgets for 2012 are well down on the equivalent budgets for 2011,” said report author Douglas Hayward, research director, IDC European services research.

When previously surveyed by IDC in early 2011, 46pc of Western European organisations had expected to raise external IT spend in 2011, and only 14pc had expected to decrease their spend – meaning that European organisations on average cut back their IT spend during 2011 from the levels they had planned at the beginning of the year.

In IDC’s view, this reining in of IT spend as 2011 progressed came in response to lowered consumer and business confidence and to the progressively worsening economic outlook during the year.

“Western European organisations are huddling toward the middle in their IT budgets for 2012; their plans are tending more toward stasis. This will be a conservative year in which discretionary spend will be held to a minimum for most organisations,” said Hayward.

“The impact is not necessarily dramatic in real terms, however, since 2012 budgets are not significantly down on the actual spend outcomes during 2011. So the bottom line is that 2012 is shaping up to be like late 2011 – only a bit worse.”

At the mercy of economic conditions

According to Thomas Meyer, European vice-president for Systems and Infrastructure Solutions at IDC, organisations feel they cut back their spend sufficiently during 2011 in response to worsening conditions, and they are hoping to get by this year on spend levels relatively close to those of 2011.

“For many organisations, there is simply less potential to cut external spend, and they may be locked into contracts that limit their leeway to reduce external IT spend. Current budgets could, however, be significantly revised downward during 2012 if economic conditions were to deteriorate dramatically.”

Despite the renewed conservatism and caution, organisations remain interested in a handful of “hot” and sometimes disruptive technologies, including cloud computing and software-as-a-service (SaaS) projects, new storage, virtualisation and rationalisation of the IT infrastructure, “consumerisation” of end-user technologies in the workplace, and the rollout of applications that either cut the organisation’s running costs or help to generate new revenues.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years