Multiple cuts push global IT budgets to 2005 levels

A worldwide survey of nearly 1,600 chief information officers (CIOs) in 2010 shows information technology budgets are at 2005 levels.

According to results from the 2010 CIO survey by IT research and advisory company Gartner's Executive Program (EXP), IT budgets will essentially remain flat in 2010, increasing by a weighted global average of 1.3 per cent in nominal terms, compared with 2009 levels where IT budgets declined 8.1 per cent.

The year 2009 was the most challenging one for IT since the survey began in 1999. CIOs faced multiple budget cuts that wiped away four years of budget increases, giving them 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 survey represented more than $120 billion (Dh441bn) in corporate and public sector IT spending.

"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."

McDonald said 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."

The 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.

CIOs in 2010 will support strategic technologies supporting more collaborative and innovative capabilities. 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 technology which was the number one priority for the past five years, dropped to number five.

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 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."

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