Outlook 2011: 4 Key Trends From Our Data 2

1. IT spending's up: With the recession over, 55% of the 552 respondents to our InformationWeek Analytics Outlook Survey say their companies will increase IT spending in 2011, while 19% will cut IT spending and 26% keep it flat. Last year, it was 45%, 24%, and 30%. The biggest change is the percentage increasing IT spending 5% to 10%: 27% are in that range, up from 16% last year. The fact that a fairly small number of companies are cutting their IT budgets and there's a healthy rise in the number increasing them shows promise. But there's also a lot of pent-up demand--59% of survey respondents report growing demand for IT at their companies. Business leaders might be expecting miracles from those small IT budget increases.

A reasonable bit of IT hiring is planned; 23% of companies expect to increase the size of their IT staffs next year, compared with 14% that planned to hire this year. Another 34% are allowed to fill openings, and only 8% of IT shops will cut. Just over a third of companies are still in a hiring freeze. A key trend in 2011 is whether moves to software as a service and cloud infrastructure will cut the need for some internal IT roles.

2. Hardware's not a dirty word: In case you hadn't heard, it's OK to buy hardware for your data center again. And not having been fed for a couple of years, the data center is starving. Last year, just 29% of survey respondents planned to increase or significantly increase spending on data center infrastructure, such as servers, storage, and switches. This year, 42% plan to do so. Forty-four percent plan to spend more on data center software, and 38% plan to upgrade networking. Despite the energy around smartphones and mobile computing, the data shows only mild interest in upgrading employee devices or productivity apps and other end user software for wireless. This finding bucks conventional wisdom that companies feel pressured to make employees' work experience as compelling as their at-home tech lives. The data suggests companies are more worried about making their data centers hum like Google's than their apps work like Facebook.

3. IT's thinking cloud: To improve IT efficiency, four of five survey respondents say their companies will use server virtualization; videoconferencing and business intelligence are close behind (see chart, left). More than half will use cloud-based CPUs or storage. That won't be for full-scale operational apps yet, but companies are piloting the cloud for uses such as app testing and big-data number crunching.

4. IT's too tactical: When IT rates its own performance, the grade depends on what's measured. Keeping the lights on, with quality systems? Top notch (see above). Keeping costs down? Same. But when it comes to speed, IT gives itself a middling grade. And less than 10% say they're excellent at driving innovation or revenue. One of five respondents says IT is a "business driver." Just over a third say their organizations are seen as cost centers, asked to cut their budgets more than others in a downturn. As companies set their sights on growth, they must decide what kind of IT organization they want, and write a budget to fit.