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IT budget & staffing survey shows bleak year ahead

IT budget & staffing survey shows bleak year ahead

IT projects are on hold, cost cutting measures continue.

The number of CIOs planning budget decreases continues to rise dramatically, according to 208 IT executives surveyed online in January 2009. More than half of IT heads (53 per cent) now plan to slash budgets in response to unfavourable economic conditions, up from 40 per cent in a similar survey conducted in October and 17 per cent in the first quarter of 2008.

Fifty-nine of CIOs are implementing IT hiring freezes, up from 46 per centin October and more than one third (34 percent) have begun reducing IT headcount, up from 23 per cent 3 months ago.

More CIOs plan cuts to IT compensation costs; 35 per centof CIOs plan a decrease in the coming year, up sharply from the 18 per centreported in October.

Nearly a third of CIOs (31 percent) say they plan to reduce their full-time, in-house staff; an increase from 21 per centin October and 14 per centin the first quarter of 2008 while close to half (48 percent) plan to reduce spending for contractors and temporary workers, up from 26 per cent3 months ago

More than two-thirds of CIOs (68 percent) say current economic conditions are causing purchasing decisions to undergo closer scrutiny by other business executives in their company.

With IT increasingly under the microscope, cost cutting is a priority for many CIOs. Almost half report that the percentage of their total IT budget allocated to new projects will decrease and 49 per centhave already begun freezing or canceling IT capital spending.

CIOs most frequently cite travel restrictions, hiring freezes and holding off on discretionary IT projects as cost cutting measures they have already begun implementing.

The percentage of CIOs slashing their training budgets increased sharply to 46 percent, from 25 per cent3 months ago. With cost cutting top of mind, some CIOs are looking for alternative IT models; 38 per centof CIOs say they are more likely to consider on-demand services and SaaS as a result of the unfavourable economic condition.

Which of the following measures are you considering taking as a result of current economic condition?

Started in the last 6 monthsPlan to start in the next 6 monthsNo plans at this time
          Postpone discretionary IT projects
58%19%23%
          Renegotiate IT vendor contract
52%22%26%
          Freeze IT hiring
59%10%31%
          Freeze or cancel IT capital spending
49%11%41%
          Reduce IT headcount
34%6%60%
          Reduce spending on IT contractors and consultants
52%17%30%
          Reduce spending on training for IT staff
46%11%43%
          Restrict IT travel
61%12%27%

How will your budget within the following categories change in the next 12 months?

IncreaseDecreaseRemain the Same
          Hardware
20%47%33%
          Applications
23%41%36%
          Network Infrastructure
26%35%40%
          Web/mobile
22%32%46%
          Outsourced IT Service
20%48%32%
          IT compensation costs (include salaries, bonuses & benefits but not stock incentives)
26%35%39%
Methodology

The CIO IT Budget & Staffing Survey was conducted online between January 12 and January 26, 2009 with the objective of gauging how current economic conditions are impacting IT spending plans. An email invitation containing a link to the survey was sent to a sample from the CIO customer database.

Results are based on 208 respondents who indicated they are the top IT executive at their company or business unit. A broad range of industries are represented including government and nonprofits (21 percent), financial services (15 percent), manufacturing (15 percent), services (14 percent), high tech, telecom and utilities (12 percent), retail, wholesale and distribution (11 percent) and healthcare (7 percent). The margin of error on a sample size of 208 is +/- 6.8 percent. Percents on questions where respondents could select only one answer may not sum to 100 due to rounding. Not every respondent answered every question.

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