by Lauren Brousell

IT Spending Continues to Rise

Sep 23, 2010

CIO’s latest economic survey indicates IT leaders are increasing budgets and investing in applications and mobile

Over half of IT leaders plan to ramp up budgets in the coming year, with only 16 percent planning cuts. So says the latest CIO Economic Impact Survey, which polled over 250 IT leaders about their spending plans and business outlook at the end of the summer. The survey also indicates 64 percent plan to increase IT capital spending in the next year, up 8 percent from April.

CIOs will direct new budget dollars toward multiple investments, including applications (50 percent), Web and mobile (42 percent), and compensation (40 percent).

Preston J. Penn Sr., CIO of Penn Telecom Group, said he is increasing spending on improving technology. “We are looking to improve how we communicate and to bring new services, such as voice over IP.”

The recession seems to have spurred adoption of alternative IT models. More than half of those surveyed said they chose cloud, on-demand services and software as a service because they reduce hardware infrastructure costs (53 percent) and provide scalability on demand (52 percent).

Phil Baughn, CIO of the Commonwealth of Kentucky, is among those looking to alternative IT. “Budgets have been dramatically decreased because of the economy, so normal plans to refresh older technology have been stagnant,” says Baughn. “We are looking outside the box.”

In terms of staffing, 41 percent of respondents said cloud offerings have helped reduce personnel costs and only 35 percent plan to increase spending on full-time in-house workers. Offshore outsourcing is steady, with 71 percent of CIOs keeping budgets the same for short-term projects.

There has been some activity in increasing top-line revenue growth, with 16 percent of respondents assigning 21 percent to 30 percent of funds to such projects.

Overall, signs of a recovery are gaining, with 48 percent of IT leaders saying their businesses have stabilized and are returning to growth. Meanwhile, 35 percent plan to increase IT capital spending in the next six months with 29 percent planning to increase IT project spending.