by Dan Muse

CIOs Cite Applications and Mobile As Top Areas for IT Budget Increases

Jul 23, 20143 mins
BudgetingCIOIT Leadership

Nearly 90 percent of IT executives expect tech spending to either increase or hold steady. And only 12 percent report budget decreases -- the lowest number reported since the inception of the CIO Tech Poll: IT Economic Outlook in 2008.

About half (47 percent) of CIOs surveyed in the most recent CIO Tech Poll: IT Economic Outlook say they expect their IT budgets to grow. Overall, they expect spending to increase by about 5 percent, which is comparable to last year’s results.

cover cio research

A year ago, 52 percent of CIOs interviewed reported increased spending. While that number is  slightly down this year, survey results also indicate a higher percentage of CIOs holding budgets flat compared to last year. 41 percent report budgets consistent with the previous year, which is up from 31 percent in the June 2013 survey. In what’s good news for the tech sector, only 12 percent of the IT executives surveyed anticipate a budget decrease — the lowest level reported since the poll’s inception in March 2008.

Growth Areas

CIOs list applications as the area for highest growth with 54 percent planning IT budget increases in that category, up from 48 percent last year. Mobile, which was the highest area growth cited last year, drops to second place (see chart below):

budget plans cio

A Discretionary Tale: Enterprise Spending vs. SMB Spending

Nearly half of the CIOs surveyed (47 percent) are planning to increase the percentage of their total IT budget allocated to new or discretionary IT projects, relatively flat with the 48 percent reported in June 2013. CIOs are fairly evenly divided when it comes to the primary focus for funds earmarked for new projects:

  • 36 percent plan to target external customer interaction, relationship and experience
  • 34 percent will focus on internal service support and processes
  • 28 percent on product development, improvements and innovation.

However, there is a disconnect when it comes to the size of the operation and discretionary projects. Enterprise CIOs are more likely to devote a higher percentage of their budget to new or discretionary projects than their SMB counterparts (54 percent, versus 43 percent).

Living on the Edge

In numbers that suggest the impact of cloud services, IT executives surveyed are shifting budget allocation from technologies that are at the core of the business (e.g., infrastructure, network, storage, compute and ERP) to edge technologies such as mobile, CRM, mcommerce, cloud, social and marketing automation that enable a new generation of productivity, collaboration and accessibility (see chart below).

edge vs core cio

Additionally, 41 percent of the IT executives surveyed say the percentage of their company’s spending with newer technology vendors such as Box, Dropbox, MobileIron and Outsystems will increase over the next year. IT executives in larger enterprise are significantly more likely than their SMB colleagues to plan to spend more with newer technology companies (54 percent, compared to 33 percent).

How IT and Line of Business Get Along

Nearly all of the CIOs surveyed say IT is involved when technology is purchased by another department. Here’s how survey respondents describe that interaction:

  • 45 percent say line of business identified the opportunity and came to IT for recommendations on technology solutions and provider selections.
  • 24 percent point to IT as the driver in identifying the opportunity and bringing their recommendations for solutions and vendors to LOB.
  • In 15 percent of cases LOB identified the opportunity or need, and came up with recommendations to be vetted by IT.
  • Only 5 percent of IT executives surveyed say IT wasn’t involved until a problem or issue came up.
  • 2 percent weren’t looped in even in the event of problems.

Download the complete survey.