In the first quarter of 2009, chief information officers experienced significant IT budget revisions, according to a survey by Gartner.
The IT research and advisory company's survey of 900 CIOs was conducted March 1 to April 30, 2009, and sought to gauge the potential impact of macroeconomic concerns on IT budgets. The results were compared to results of the Gartner Executive Programs (a membership based organization of more than 3,600 CIOs worldwide) 2009 CIO Survey, conducted from September to December 2008, which had more than 1,500 responses.
CIOs in the original survey reported a flat budget with a minor increase of 0.16 percent. CIOs responding to the survey in the first quarter of this year now report a weighted average decline of 4.7 percent. More than 90 percent of firms changing their budgets made a reduction in the first quarter, with the average reduction being 7.2 percent. Fifty-four percent of respondents reported no change in their IT budget, with the remaining 4 percent reporting an increase in their IT budget.
"CIOs reported that renegotiating vendor contracts and head count reductions were the primary focus areas for accommodating budget reductions," said Mark McDonald, group vice president and head of research for Gartner EXP. "CIOs report shifting more work to in-house resources and delaying capital expenditures more than reducing IT project investments."
The survey showed that first quarter 2009 IT budget reductions were reported across the board based on both size and geography of the organization. CIOs in healthcare-related industries reported an average budget increase of 2.2 percent, but CIOs in all other major industries reported a decline in the first quarter of 2009.
According to the survey, CIOs recognize the potential for further cuts in 2009, but most see that as unlikely. The percentage of CIOs with a contingency plan for the remainder of 2009 has more than doubled compared with 2008. CIOs with additional contingency plans for 2009 are planning for the potential of renewed IT spending, as well as additional reductions. While 44 percent of CIOs do not believe they will need to tap into their contingency plans, those that do believe they will do so during the next six months.
The survey found that CIOs expect the economy to recover between the first and third quarter of 2010. CIOs said they plan to increase IT investment projects and workforce levels as their first investments in such a recovery. Software, hardware and infrastructure investments were also among their top priorities.
"Executives making plans in the fourth quarter of 2008 faced an uncertain future as the global financial crisis unfolded," McDonald said. "Based on CIO contingency plans, they are now better prepared for future economic challenges. However, most CIOs do not see immediately implementing those plans. This supports a position that the first quarter budget adjustments reflect firm plans for the remainder of 2009."
