Cost Cutting Remains Top CIO Priority, Survey Finds

A new survey from application modernisation specialist Micro Focus has found that, despite the recovering economic outlook and analyst expectations of a recovery in IT spending in 2010, the bulk of UK CIOs remain firmly focused on cost cutting.

The survey contradicts some of the latest findings from analyst houses and others. For example, IDC recently said that IT spending is rebounding in the wake of the global recession, with businesses spending on everything from PCs and servers to storage devices and networking equipment.

But the Micro Focus survey of 250 CIOs and IT decision makers in companies of 1,000 employees or more, found that reducing the bottom line still remains the top priority for 43 percent of IT departments.

Doing More With Less

And 50 percent of UK CIOs expect budgets to be cut again in 2010.

The UK is also decidedly more bleak in its long-term view compared to other countries, with 43 percent of UK respondents saying that cost cutting will remain their top priority for the next three years, compared to just 26 percent in the US and 17 percent in Germany.

This news comes as the British Government, which has been one of the biggest spenders on IT in the last ten years, warned that it will reduce its mammoth IT spending spree as part of Britain’s attempt to cut its budget deficit.

The research also showed that 50 percent of respondents have had their IT budgets cut for the current year (the same as the global average). This is despite the UK’s economy officially emerging from recession in January.

The survey questioned IT professionals in global companies based in the United States, United Kingdom and Germany across the verticals of financial services, healthcare, retail and the public sector.

Modernisation, Not Job Cuts

However, it seems that most respondents recognise that headcount figures have often been trimmed as low as possible, with 63 percent of the UK’s respondents instead saying that they believe application modernisation is the best way of cutting IT costs.

More than 80 percent also said that modernisation is important to their current IT strategy, with 86 percent either currently working on a modernisation project or having completed one in the last two years.

“Application modernisation has clearly been the unsung trend of the IT industry over the last 12 months, and is set to remain so for the immediate future,” said Stuart McGill, CTO, Micro Focus comments on the findings. “And with large projects realising tangible savings of millions of pounds in just a few years it is easy to see why.”

“CIOs and IT professionals are being asked to do two things at once: cut even more costs and innovate to meet customer demands,” he added. “They should remember that the savings they make by migrating their mainframe applications to more modern architectures can actually be reinvested into new projects, so they can in fact achieve both aims at the same time.”

“One of the abiding themes of our research for the last decade has been ‘More for Less’ – first in private sector IT and now very much the key topic in the public sector too,” said Richard Holway, chairman of analyst firm TechMarketView. “Saving money on IT doesn’t have to mean throwing everything away and starting again. Doing things in a more intelligent manner is often a smarter move.”

A video summarising the finding of the survey can be found here.