IT budgets in 2010 to be at 2005 levels

19 Jan 2010

CIOs are planning on having the same budgets as 2005. Technology priorities will show significant change, however, as the transition from recession to recovery gets under way.

IT budgets will essentially be flat in 2010, increasing by a weighted global average of 1.3pc in nominal terms, compared with 2009 levels, where IT budgets declined 8.1pc, according to results from the 2010 CIO survey by Gartner Executive Programs (EXP).

A challenging year

The year 2009 was the most challenging year for IT since the survey began in 1999, and CIOs had faced multiple budget cuts, wiping away four years of budget increases, giving CIOs basically the same level of resources as they had in 2005. While there are some signs of recovery in the 2010 projections, these will not overcome last year’s cuts.

The worldwide CIO survey was conducted by Gartner EXP from September to December 2009 and represents CIO budget plans reported at that time.

The Gartner EXP CIO report, Leading in Times of Transition: The 2010 CIO Agenda, surveyed 1,586 CIOs representing more than US$126 billion in corporate and public-sector IT spending across 41 countries and 27 industries.

“(The year) 2009 was the most challenging year for CIOs in the corporate and public sectors as they faced multiple budget cuts, delayed spending and increased demand for services with reduced resources,” said Mark McDonald, group vice-president and head of research for Gartner EXP.

“This is set to change in 2010, as the economy transitions from recession to recovery and enterprises transition their strategies from cost-cutting efficiency to value-creating productivity.”

IT transitioning

McDonald said that while technologies are transitioning from “heavy” owner-operated solutions to “lighter-weight” services, CIOs are, in turn, transitioning IT beyond merely managing resources to taking responsibility for managing results.

“Transition gives the enterprise and IT the opportunity to reposition themselves and exploit the tough corrective actions taken during the recession,” he said.

“CIOs see 2010 as an opportunity to accelerate IT’s transition from a support function to strategic contributor focused on innovation and competitive advantage. They have aspired to this shift for years, but economic, strategic and technological changes have only recently made it feasible.”

Gartner EXP’s CIO survey findings show that, in the near term, business expectations and CIO strategies appear stable, with a continued focus on business process improvement, cost reduction and analytics.

Great expectations

Business expectations are shifting from a focus on greater cost-based efficiencies, to achieving better results based on enterprise and IT productivity.

These productivity gains will come from collaborative and innovative solutions that take advantage of the new “lighter-weight” services-based and social-media technologies, including virtualisation, cloud computing and Web 2.0 social computing.

This transition can be seen in the Top 10 technology priorities for CIOs in 2010, where business intelligence, the No 1 technology the past five years, dropped to the No 5 priority.

These strategic, “lighter-weight” technologies are of increasing importance to the CIO. Exploiting them provides the cost, capacity and capability gains needed to define, source, create and deploy information- and process-intensive solutions that will reshape IT and its future role.

Moreover, the technologies that CIOs are prioritising in 2010 are technologies that can be implemented quickly and without significant upfront expense, instead of investing millions of dollars to get millions in benefits, with these technologies, up front investments are measured in thousands of dollars to get those same benefits.

“These technologies, implemented properly, create the opportunity for IT to change its role and the operational performance of the enterprise,” said McDonald.

“Asymmetric technologies like virtualisation, cloud and Web 2.0 enable companies to get out from under a front-loaded heavy investment model that limits IT’s agility and flexibility.”

“While enterprises will transition at different rates and times, every CIO faces the need to raise productivity, create new capabilities and use the recovery to drive fundamentals of the current agenda and the repositioning of IT,” McDonald concluded.

“Such transitions will not happen overnight but they will start with the decisions and directions established in 2010.”

By John Kennedy

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