CIO IT budgets to be flat this year

by CXOtoday Staff    Jan 18, 2012

Despite tough economic conditions and future uncertainties, CIOs rank growth as their top priority, finds a Gartner survey

IT organizations will have to deliver on multiple priorities without an increase in their IT budget. CIO budgets are expected to be flat in 2012, increasing just 0.5 percent according to a global survey of 2,335 CIOs by Gartner.

These investments are strongest among enterprises in Latin America with a 12.7 percent IT budget increase, and the Asia/Pacific region with a 3.4 percent increase.

Investments are weakest among the largest enterprises in North America decreasing 0.6 percent and Europe down 0.7 percent. Larger organizations, those with IT budgets more than $500 million, have continued to cut their IT expenditures, offsetting modest growth in the rest of the survey population.

“Technology’s role in the enterprise is increasing. This does not mean, however, that the role of the IT organization 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.”

Gartner said that 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.

“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.”

The worldwide survey was conducted in the fourth quarter of 2011, and it included CIOs representing more than $321 billion in CIO IT budgets and covering 37 industries in 45 countries.

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.

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. Sixty-one percent of enterprises responding to the survey say they will be improving their mobile capability over the next three years.

Meeting business expectations for increased growth, reduced cost or a transformed customer experience normally involves a significant increase in IT resources. Forty-six percent of CIOs reported that their CIO IT budget would increase from 2011 to 2012 in terms of actual spending. The average firm in this year’s survey will see a modest budget increase of between 2 and 3 percent.