CIO's December 2009 Economic Impact Survey Results

CIO — CIO's latest IT Economic Impact survey suggests technology budgets may be stabilizing and that spending on new projects is finally under way—particularly at midsized and large companies.

Four out of 10 CIOs report they plan to increase their IT capital spending in the coming year. Companies with $1 billion or more in revenue are opening their checkbooks fastest: 41 percent of CIOs at these companies plan to increase spending, compared to 29 percent in September. At midsized companies, 42 percent plan to spend more, up from 35 percent last fall. An average of 37 percent of new spending is allocated to revenue-generating projects, reflecting a new focus by CIOs on the top line.

The amount of attention to top-line revenue surprised some CIOs, though they have shifted more spending in that direction themselves.

"There are a number of initiatives wrapped around trying to get our sales organization better and more pertinent information to empower them to deal with our customers faster," says Kevin Clinton, VP and CIO of Steel Warehouse, a large steel parts manufacturer based in Indiana.

Both applications and infrastructure are getting attention. More than a third of CIOs plan to increase spending on applications (43 percent), hardware (35 percent) and web or mobile technologies (35 percent). Larry Pickett, CIO of Purdue Pharma, is giving infrastructure upgrades priority, along with revenue-generating projects. Among them, a global system for collaborating on business opportunities.

The survey, conducted among 367 heads of IT in December, also indicates heavy cost reductions are likely to be complete, but cautious spending will continue. "I think we're being much more careful about length of vendor contracts," says Clinton. "Not just renegotiating, but also making sure that we put in place the right hooks so that if we need to renegotiate later it becomes easier."

Carolyn Johnson is research manager and Simone Levien is assistant editor for CIO.