IT Budgets: Still Guardedly Optimistic? - InformationWeek

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IT Leadership // CIO Insights & Innovation
Commentary
6/30/2008
08:01 PM
John Soat
John Soat
Commentary
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IT Budgets: Still Guardedly Optimistic?

InformationWeek last week held its annual Editorial Advisory Board meeting. The Editorial Advisory Board is made up of several leading CIOs (and former CIOs) and technology-oriented executives and investors. The most incendiary topic: the economy.

InformationWeek last week held its annual Editorial Advisory Board meeting. The Editorial Advisory Board is made up of several leading CIOs (and former CIOs) and technology-oriented executives and investors. The most incendiary topic: the economy.The discussions at the Editorial Advisory Board meeting are, understandably, off the record. However, I can relate that there was concern expressed about how companies are going to translate the current economic shakiness into a viable IT strategy.

Is there a technology spending strategy that doesn't involve slash-and-burn tactics? Is it time to shut down IT spending all together?

All year long, as economic indicators have grown increasingly negative, discussions of IT spending have been relatively benign. Most research and analysis has tended to emphasize a guardedly optimistic approach to IT budgets on the part of most organizations. Gartner said in May that it doesn't see evidence of widespread IT budget cuts, but "negative economic news appears to be making enterprise buyers more cautious." Gartner also has said that if the economy continues to slow down, companies could take "aggressive steps to reduce or even freeze IT budgets."

Technology distributor CDW, which conducts a regular IT Monitor survey of more than 1,000 organizations, said in April that spending indicators were slipping to the negative side. "There is a hesitancy on the part of IT decision makers to invest heavily in new staff or infrastructure in a volatile economic environment," CDW VP Mark Gambill said in a statement.

However, those survey results (like the above statement) still erred on the optimistic side. In answer to the question, "Will IT budgets increase over the next six months?" 49% of respondents said yes in April, while 53% had said yes in February. That's a step back, but not a big one.

Our last survey about recession worries and IT spending, conducted in March, indicated a significantly more negative outlook. Fewer than half of the 374 business technology executives who participated (43%) answered "no" to the question, "In response to concerns about the economy, is your organization being asked to ratchet back spending on IT this year?"

What if we conducted that survey today? How many respondents would answer no to that question now?

Budgets are usually set at the end of the year for the following year (OK, beginning of the new year, more realistically), so it takes considerable force to turn that ship around. However, now that we're past the halfway point for 2008, are companies revisiting their technology spending plans? Are CIOs being asked to cut? And if so, cut what? -- spending, salaries, services?

What's the mood in your IT organization?

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