IT Budgets Dip As Business Priorities Increase

Gartner has warned that IT budgets will dip slightly this year but still have to deal with an increasing number of business priorities.

It said that CIO IT budgets are expected to be flat, increasing just 0.5 percent, but IT budgets in North America and Europe are declining, according to a global survey of CIOs.

Combination Outlook

Forty-six percent of CIOs reported that their CIO IT budgets would increase from 2011 to 2012 in terms of actual spending, and the average firm in this year’s survey will see a modest budget increase of between 2 and 3 percent.

The report found CIOs increasingly see technologies such as analytics/business intelligence, mobility, cloud and social in combination rather than isolation to address business priorities. Changing the customer experience requires changing the way the company interacts externally rather than operates internally. Analytics/business intelligence was the top-ranked technology for 2012 as CIOs are combining analytics with other technologies to create new capabilities, such as analytics plus supply chain for process management and improvement, analytics plus mobility for field sales and operations, and analytics plus social for customer engagement and acquisition.

“Technology’s role in the enterprise is increasing. This does not mean, however, that the role of the IT organisation is increasing,” said Mark McDonald, group vice president for Gartner Executive Programs and Gartner fellow. “CIOs concentrating on IT as a force of operational automation, integration and control are losing ground to executives who see technology as a business amplifier and source of innovation. Effective leaders use technology, which includes IT, to strengthen the customer experience and eliminate costly internal distortions. They are using technology to ‘amplify’ the enterprise.”

Sixty-one percent of enterprises responding to the survey say they will be improving their mobile capability over the next three years. The majority have a mobility strategy that calls for becoming a market leader in their industry – leading to “significant competition” as everyone seeks to be “above average” in its industry. Overall, CIOs rank growth as their top priority, despite tough economic conditions and future uncertainties. They are particularly attentive to attracting and retaining customers and to creating products and services, the report noted.

Growth And Efficiency

“In the face of continued economic uncertainty and government austerity, business strategies call for a combination of growth and operational efficiency. As reflected in the 2012 CIO Agenda survey findings, effective leaders see customers as the key factor in both of these strategic components, with the customer experience their focal point in reconciling potentially conflicting goals,” McDonald said. “Present economic conditions may tempt CIOs to force IT back into cost-cutting mode, but senior executives expect technology – and this includes IT – to address the tough challenges by amplifying enterprise strategies and operations.”

Larger organisations, those with IT budgets more than $500 million (£324m), have continued to cut their IT expenditures, offsetting modest growth in the rest of the survey population.

The worldwide CIO survey was conducted in the fourth quarter of 2011, and it included 2,335 CIOs, representing more than $321 billion (£208bn) in CIO IT budgets and covering 37 industries in 45 countries. “Technology is playing an increasing role in enterprise growth, innovation and operational performance while technology’s definition now incorporates new combinations of traditional IT systems, consumer devices and their respective services,” the report concluded.