Glimpses of stabilisation amid dark budget forecasts

Glimpses of stabilisation amid dark budget forecasts

New CIO survey suggests cost-cutting and budget slashing may be slowing or, at the very least, leveling out.

No one has to remind CIOs just how bad the last 10 months have been: New data from CIO's exclusive survey of top IT executives shows that CIOs may have hit rock bottom with their budgeting and cost-cutting measures. First, the bad news: Just 14 per cent of the 171 IT leaders who took part in the May 2009 "CIO Economic Impact Survey" expect IT budget increases in the near future, which is down from 20 per cent in a similar survey conducted in January, and 63 per cent in March 2008.

It's not surprising that in this most inhospitable of economic environments, 65 per cent of CIOs report that IT purchases are subject to closer scrutiny by other business executives. In addition, 40 per cent of CIOs say they will have to shrink payroll, which is up from the 35 per cent who said the same thing in January 2009.

And CIOs are still chopping away at operational costs begun six months ago. According to the survey, IT execs have halted discretionary IT projects, renegotiated IT vendor contracts and frozen IT hiring during the last half year.

However, the most recent survey results suggest that all the cost-cutting and budget slashing may be slowing or, at the very least, leveling out: For instance, the percentage of CIOs planning for IT spending decreases remained relatively flat (50 per cent in May versus 53 per cent in January), and the percentage anticipating no change to their IT budget increased from four months ago.

In addition, fewer CIOs responding to the May survey say that the percentage of their total IT budget allocated to new initiatives will decrease in the coming year (43 per cent in May versus 49 per cent in January), while 34 per cent expect that percentage to remain the same, up from 26 per cent four months ago.

Software vendors will be pleased to hear that the software applications category shows the highest percentage of CIOs planning to increase spending (28 per cent, up from 23 per cent earlier this year). On the other hand, hardware (47 per cent), outsourced IT services (40 per cent) and IT compensation costs (40 per cent) are the most frequently cited categories where CIOs anticipate cuts in the coming year.

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Tags CIO rolecostseconomic crisis

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