Computerworld - In past recessions, IT budget-cut demands handed down to CIOs were deep -- and indiscriminate.
"The attitude was, 'Let's cut, cut, cut -- I don't care,'" said Jerry Luftman, a professor of information systems at Stevens Institute of Technology in Hoboken, N.J.
With this recession, IT budgets have been trimmed, to be sure, but there has also been "a lot of concern with how IT can be leveraged to reduce the cost of business," said Luftman, who analyzed a survey released Monday by the Society for Information Management (SIM). The results were released during this week's SIMposium 09 conference in Seattle, which drew more than 400 CIOs. The Chicago-based group counts 4,000 CIOs and other senior IT leaders among its members.
According to this year's survey of 243 SIM members, "IT cost reduction" ranked fifth on their list of management concerns. Topping the list was "business productivity and cost reduction," followed by "IT and business alignment."
As proof that businesses have been willing to invest in IT to save or make more money, the most popular areas of investment this year were business intelligence, server virtualization and ERP.
Investing in the latter two can help companies save money quickly, Luftman said.
BI is a different beast. Analytics can help a company boost its top line. But even though companies are struggling with longer-than-expected rollouts, they haven't given up.
"Because there's a lot of promise, BI hasn't been pushed to the wayside," Luftman said.
Overall, the recession has pinched CIO wallets. Fifty-two percent reported that their 2009 budgets were smaller than 2008's. However, just 28% of CIOs are expecting their 2010 budgets to be smaller than 2009's.
Despite fewer budget cuts, CIOs still feel uncertain about the economy, making them cautious about taking on additional, permanent costs.
"Companies are not hiring next year because they worry about what it will cost them from a health care benefits perspective," Luftman said.
Instead, CIOs are turning to outsourcing, which is expected to account for 15% of IT budgets in 2010, compared with 12% in 2009. Offshoring of internal employees is also growing fast and is expected to take up 6% of budgets in 2010, compared with 4% this year.
Infrastructure spending remains weak and is expected to fall to 31% of IT budgets next year, from 33% this year.
"Now is not the time to be a vendor," Luftman said.
IT budgets this year accounted for an average of 3.83% of respondents' companies' revenue, which is up slightly from 3.63% for 2005 to 2008. An unlucky 22% of CIOs reported that their IT budgets accounted for 1% or less of their corporate revenues, while a fortunate 42% reported that their budgets accounted for 5% or more of revenue.
Another notable data point: The average CIO tenure continues to grow, hitting 4.6 years in 2009. That's up from 3.6 years just three years ago.
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