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A year of reckoning for CIOs

A year of reckoning for CIOs

IT spending will rise, but not rebound, says Ovum.

Global IT expenditure is expected to rise slightly this year, the first increase since the onset of the global economic downturn, reports analyst firm Ovum. In its survey of IT decision makers, Ovum states that one-third expect their budgets will increase in 2010. Despite this cautious optimism, there are signs that CIOs do not yet view IT as an engine for growth and that 2010 will mostly be a year of reckoning.

Ovum says fundamentally IT spending is trending upwards, but most increases – as well as decreases – will be slight, between 1 and 5 percent.

The vast majority of enterprises will continue to experience flat or zero budget growth this year.

"The survey data, while promising, does not translate into an IT spending recovery,” says Rhonda Ascierto, senior analyst at Ovum, on the release of the report entitled, “IT Spending will Rise, yet 2010 will be a Year of Reckoning for CIOs”.

“Realistically, the numbers more likely reflect the effect of previously deep budget cuts, during 2008 and the first half of 2009, which left many IT departments operating at ‘bare-bones’ capacity,” Ascierto says in a press statement.

Furthermore, the survey data shows the proportion of CIOs forecasting slight decreases and significant increases in IT budgets remained unchanged last year.

Combined with the high percentage of respondents that will leave their IT budgets unchanged in 2010, which is rising slightly to 42 percent, the report states that many enterprises remain vulnerable and are uncertain about near-term business prospects.

Ovum says IT projects likely to be green-lighted are those not requiring a major upgrade of existing systems and business processes, but are modifications within existing and proven boundaries in an incremental manner and in response to business changes.

The research company says 1745 CIO respondents were interviewed globally, with three themes emerging:

• The rising sentiment that the global economy is starting to show signs of recovery is having a positive impact on planned IT budgets in 2010.

• The perception gap between forecast and actual changes in IT expenditure has widened.

• IT spending trends vary wildly by region, yet all vertical industries have suffered from lower IT spending compared to pre-recessionary levels.

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