CIOs who survived 2009, during which IT budgets dropped by 8 percent on average, don't expect to see business recover or IT dollars return immediately in 2010. They do, however, intend to makeover IT departments as leaner, more lightweight entities ready to respond to business needs, according to Gartner research released Tuesday. A survey of 1,600 CIOs worldwide shows that while many speculate economic conditions will recover, 41 percent of IT leaders globally are planning for "continued business contraction." Worldwide, 53 percent expect to see stabilisation in 2010, and 6 percent expect to see growth.
Among US CIOs polled, 47 percent expect continued contraction, 23 percent believe business and budgets will stabilise this year, and 26 percent see some recovery and some growth. The remaining 4 percent in the United States say they will see revenue growth above 2008 levels in 2010, according to Mark McDonald, group vice president and head of research, Gartner Executive Programs.
Gartner's annual CIO survey, in its 11th year, polled 1,600 CIOs worldwide representing US$120 billion in IT spending between September and December 2009. The goal, McDonald says, is to understand the priorities of IT leaders and the resources available to these CIOs. The message for 2010 was clear: transition. CIOs will use another tough economic year to transition from: recession to recovery and growth; strategic cost-cutting to raising enterprise productivity; and owner-sourced technologies to lightweight social technologies.
"Two things came out of the survey: 2009 was the toughest for IT on record, and CIOs reported that 2010 would be another tough year," McDonald says. "IT budgets are projected in 2010 to have a modest recovery off of their lows in 2009, but they are not expected to be anywhere near enough to recoup the cuts they took. CIOs recorded final budgets at 8.1 percent lower than the year before, and 41 percent reported they took multiple budget cuts during the year."
Gartner estimates 2010 budgets in the United States will be 2.5 percent higher than 2009, which is on par with 2005 budgets. The economic conditions are driving CIOs to reshape their focus from cost efficiencies to productivity. As part of the economic recovery, McDonald says IT leaders realize they need to produce more services, respond to the business more quickly and deliver more value with significantly less resources. Another significant find in Gartner's survey is that IT doesn't expect to return to previous operating models following this recession.
"When we asked CIOs if they thought IT would return to the way it was, 50 percent said no. From talking with case-study companies, the basic economic funding model of IT is changing," McDonald explains. "The cost profile and technical needs associated with virtualisation and cloud computing, for instance, are different, and already about 40 percent of CIO budgets are allocated for services outside of the company. We found that the whole nature of the IT budget has changed."
While 36 percent surveyed by Gartner expect IT to move back to pre-recession ways and 14 percent simply weren't sure, McDonald says many IT leaders are planning to revamp their departments by way of new technologies and skill sets to help businesses return to growth in 2010 and to streamline IT for future business needs. According to Gartner, this evolution of IT is needed and the recession helped kick CIOs into high gear to enable technology groups to transition to more business-relevant organizations within a company.
"We are seeing leading CIOs making deep structural changes in IT to put it on a completely different trajectory, one that is leaner, lighter weight, more responsive and more business-relevant," McDonald says.
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