IT Budgets Flat or Falling for Remainder of 2009

Another bright note is most (54.6%) of the exec’s surveyed feel their budgets are at least meeting the current needs of the business. CE’s conclusion is CIOs have done a very good job of managing IT financially and, because of this, they have not had to resort to Draconian measures to bring IT in line with reduced demand from the business:

“Contrary to the wishes of IT product and services providers, growing IT budgets are not always appropriate. When recession causes business volume to decline and user head counts to fall, it is incumbent on IT executives to scale back their level of IT operational spending to meet economic realities. (This) is a testament to the ability of many IT executives to cut spending while still meeting the needs of the business.”

What has changed dramatically from last year, and reflects the “new normal” at many organizations, is CIO’s priorities list. Reducing the cost of IT to the business is the new No.1 priority for most CIOs. Coming in at No.2 is leveraging IT for strategic value; at No.3 is improving IT’s service levels. Bringing new systems online has, not surprisingly, fallen out of favor, but upgrading existing systems has not.

“IT managers need to stay focused on the strategic as opposed to making just short-term, tactical cost cutting measures and I think this study indicates this is indeed what is happening,” said Longwell by way of explanation.

What else has changed is headcount. Most CIOs are reducing staff this year. Through most of last year, IT staffers had it pretty good because CIOs were looking elsewhere to cut costs. Now, things have caught with them and 46% of IT organizations plan to cut staff; some as deep as 10%. This is up 24% from last year. For the best and brightest, however, they may be able to find work at the 27% of companies that plan to add staff this year so things might not be all bad.

At the end of the day, these numbers do reflect the new reality that IT is important to most businesses and is no longer viewed simply as a cost center to slashed at the first sign of a downturn, said Longwell. So, there is that. “You need IT to make the business more efficient and more productive. That doesn’t mean there isn’t a lot of pressure on IT folks to reduce their budgets.”