Firms Cautious on IT Spending, but Confidence Up in Survey

Corporate and other information-technology professionals are signaling some increasing economic confidence — with a survey registering small rises in some IT spending and staffing plans — although uncertainty still seems to be the order of the day.

In recent research by CDW IT Monitor, budgetary expectations that reflect spending and staffing plans measure a tiny one-point rise in the 2011 first half, compared to last year. And much of the expected growth appeared to be limited to mobile and cloud-computing-related segments.

“CIOs are looking at every IT investment in terms of how it makes sense for the business and our data shows they are still spending on key investments including software and hardware — particularly mobile devices, virtualization and security,” according to Thomas E. Richards, president and chief operating officer of CDW, a Vernon Hills, Ill.-based provider of technology products and services.

Overall, he describes the mood among IT decision-makers in the current economy as “cautious optimism.”

CDW does its CDW IT Monitor research and analysis in association with polling firm Richard Day Research. It uses an index number based on a 0-to-100-point scale, with 63 being the benchmark established in December 2007. Its survey includes 1,054 IT decision-makers across a range of companies, industries and businesses, polled between May 26 and June 3.

The research had noted a six-percentage-point drop in its index in December 2010, after budget expectations had held steady for most of that year. But the latest CDW overall index number registers a one-point increase year-over-year, to 68. Still, only 43% of respondents expect an increase in IT budgets in this year’s second half, a decrease of five percentage points from the same time last year.

Major Shift to Software

Among the various areas for which budget forecasting was measured, large businesses and the federal government are weakest in the latest poll, off 10 points and 17 points from last year, respectively.

Despite the fall-off in the totals of respondents expecting higher budgets, though, the investments that are being planned by CIOs for late this year reflect a decided shift to software installations — at a level that CDW calls the greatest on record, and covering a significant part of their organizations.

Two of every five technology decision-makers expect to make such software investments, the research shows, up six percentage points year-to-year, and four points more than the previous record, set in the 2010 fourth quarter.

And in another indication that industry expectations are deeply mixed, 75% of respondents indicated that they expect to purchase new hardware over the same period — seven percentage points higher than last year.

Virtualization, Security and the Cloud

A breakdown of the results shows that the leading areas in which higher spending plans are being made include virtualization (59%), security (58%) and cloud computing (56%.) Expectations for cloud-related investment show the largest jump — up nine points from April.

The rise in cloud, virtualization and mobile computing applications have led 48% of respondents to say that security is a greater priority than it has been in the prior two years, with the greatest area of concern being internal threats.

Adds Richards, “From a business perspective, CIOs are interested in enabling a more mobile workforce in order to enhance productivity and provide flexibility. However, they are challenged with making the disparate pieces work together and ensuring data security. They will continue to think strategically about how they are moving forward.”

Medium-size businesses and state governments have a more favorable budget outlook, the research shows — with 59% and 32% of respondents in those areas expecting increases in outlays, respectively.