by Veronica C. Silva

Gartner: IT Spending Persists As CIOs Upgrade Infrastructure

Sep 17, 2010
BudgetingCIOIT Leadership

Without waiting for any categorical confirmation if the global financial crisis has finally ended, global CIOs continue to upgrade their organization's IT infrastructure.

Without waiting for any categorical confirmation if the global financial crisis has finally ended, global chief information officers (CIOs) continue to upgrade their organisation’s IT infrastructure.

According to a global survey of CIOs conducted by Gartner, IT spending trends in the first half of the year reveal that on the average, spending this year would be at 1.1 per cent than last year’s. This is close to the 1.3-per cent average that 1,600 CIOs surveyed last year said they would spend this year.

From June to August 2010, the Gartner Executive Program’s survey involving more than 500 CIOs revealed that they are going to increase their 2010 capital expenditures on IT by three per cent with a 1.3-per cent cut in operating budgets.

Both spending projections, however, follow a weighted global average reduction in IT budgets of 8.1 per cent for 2009, a Gartner press statement stated.

Changing priorities

Mark McDonald, group vice president and head of research at Gartner Executive Programs, said these survey results indicate that the global economic crisis has prompted CIOs to change their spending priorities. While most organisations did not expand their IT budgets as the world reacts to the global financial crisis, CIOs had to come up with ways to fund the upgrade.

“The need to upgrade infrastructure is being appropriated from reduced operating budgets,” said McDonald. “CIOs felt they could no longer delay infrastructure upgrades and other capital investments and they funded them at the expense of operating budgets.”

Even as the survey pointed to a recovery of industries hardest struck by the financial crisis in 2008 and 2009, CIOs of consumer/retail, financial services and manufacturing only felt modest growth in IT budgets in the first half of 2010.

Forty-nine per cent of CIOs reported their budgets followed this trend but a significant number did not. In the first quarter of 2010, 26 per cent were able to finalise their budget. On the other hand, 11 per cent of CIOs said their budget have not been finalised.

“Size certainly matters in terms of IT budget outlook,” said McDonald. “Smaller firms report significantly stronger IT budget growth percentages than their larger counterparts.”

McDonald further explained that the larger the firm, the tighter it is at managing its IT budget in general, particularly IT operating expenses.

“This continues a trend we have observed since 2008 as larger IT organisations started reducing their resource requirements through consolidation, waste elimination and other measures. CIOs of the largest firms indicate that opportunities in these areas remain,” McDonald said.

With more than 40 per cent of respondents seeing some form of economic recovery, the survey noted the improvement in CIOs’ view of the future since the start of 2010. Still, the survey found that 60 per cent of all respondents continued to see economic challenges.