SIM: CIOs Feeling Cost Pressure
Despite perceptions and some evidence that technology is a prioritized spending category in organizations, CIOs say productivity and cost savings are their current top objectives, according to a new study from the Society for Information Management.
Despite perceptions and some evidence that technology is a prioritized spending category in organizations, CIOs say productivity and cost savings are their current top objectives, according to a new study from the Society for Information Management.
SIM’s just released survey, which annually reaches out to more than 3,500 CIOs and IT executives at member organizations, had historically placed business and IT alignment at the top of CIO concerns. This year finds that CIOs are facing the same cost-saving pressures as other parts of the organization, says Jerry Luftman, SIM VP, lead researcher for the report and executive director, Global Institute for IT Management.
“There is overall uneasiness about the economy and election. Companies are being more cautious with budgets, hiring and salaries and there is increased attention to IT infrastructure spending,” Luftman says.
After business productivity/cost and business/IT alignment, the remaining of the top five concerns this year are business agility and speed to market; revenue generating IT innovations; and reducing the actual costs of information technology infrastructure.
The top five applications and technologies cited for 2012 by CIOs are business intelligence (includes knowledge management, analytics, big data, etc.); cloud computing; enterprise resource planning (ERP); collaborative/workflow tools; and customer relationship management (CRM). The order is identical to last year except for collaborative/workflow tools, which jumped from eighth to fourth place this year, replacing mobile applications, which fell to sixth place.
On the cloud computing front Luftman says more uptake and budgeting for experimentation, especially for public cloud services, bodes well for the industry. “Companies have squeezed what resources they could out of virtualizing their server farms and now they are saying the best vehicle for reducing IT budget is outsourcing cloud computing.”
Still, the average percentage of IT budget allocated to internal cloud projects in 2012 is 5 percent versus 6 percent in 2011; for external cloud projects the 2012 budget average is 4 percent versus 5 percent in 2011.
In 2012, IT budgets increased for 47.9 percent of respondents compared to 56 percent in 2011. Budget decreases impacted 34.5 percent of respondents compared to 17 percent in 2011. About 46 percent expect budgets to increase in 2013; and 22 percent expect budgets will decrease.
Budgets for staffing and education are also under pressure. Salaries increased for 60 percent of IT staff in 2012 compared to 66 percent in 2011; 11 percent saw salaries decrease compared to 8 percent in 2011. Education and training budgets, slightly over 3 percent of overall in 2011 are slightly under 3 percent in 2012.
Luftman says budget pressure will continue especially as more outsourcing services reach the mainstream, though relentless pressure on IT may come at the employer’s peril. “Those companies that are not investing in their people are going to have a real problem with morale and keeping people once the economy turns around.”
Overall, more corporate revenues are going to the IT budget. In 2012, IT consumed 4.94 percent of corporate revenue compared to 3.55 percent in 2011.
Luftman will present his findings at the annual SIMposium in Dallas October 28-30. More information is available at SIMnet.org.
--This story originally appeared in Information Management. Jim Ericson is editorial director of Information Management, a SourceMedia publication. You can reach him at Jim.Ericson@sourcemedia.com.
SIM’s just released survey, which annually reaches out to more than 3,500 CIOs and IT executives at member organizations, had historically placed business and IT alignment at the top of CIO concerns. This year finds that CIOs are facing the same cost-saving pressures as other parts of the organization, says Jerry Luftman, SIM VP, lead researcher for the report and executive director, Global Institute for IT Management.
“There is overall uneasiness about the economy and election. Companies are being more cautious with budgets, hiring and salaries and there is increased attention to IT infrastructure spending,” Luftman says.
After business productivity/cost and business/IT alignment, the remaining of the top five concerns this year are business agility and speed to market; revenue generating IT innovations; and reducing the actual costs of information technology infrastructure.
The top five applications and technologies cited for 2012 by CIOs are business intelligence (includes knowledge management, analytics, big data, etc.); cloud computing; enterprise resource planning (ERP); collaborative/workflow tools; and customer relationship management (CRM). The order is identical to last year except for collaborative/workflow tools, which jumped from eighth to fourth place this year, replacing mobile applications, which fell to sixth place.
On the cloud computing front Luftman says more uptake and budgeting for experimentation, especially for public cloud services, bodes well for the industry. “Companies have squeezed what resources they could out of virtualizing their server farms and now they are saying the best vehicle for reducing IT budget is outsourcing cloud computing.”
Still, the average percentage of IT budget allocated to internal cloud projects in 2012 is 5 percent versus 6 percent in 2011; for external cloud projects the 2012 budget average is 4 percent versus 5 percent in 2011.
In 2012, IT budgets increased for 47.9 percent of respondents compared to 56 percent in 2011. Budget decreases impacted 34.5 percent of respondents compared to 17 percent in 2011. About 46 percent expect budgets to increase in 2013; and 22 percent expect budgets will decrease.
Budgets for staffing and education are also under pressure. Salaries increased for 60 percent of IT staff in 2012 compared to 66 percent in 2011; 11 percent saw salaries decrease compared to 8 percent in 2011. Education and training budgets, slightly over 3 percent of overall in 2011 are slightly under 3 percent in 2012.
Luftman says budget pressure will continue especially as more outsourcing services reach the mainstream, though relentless pressure on IT may come at the employer’s peril. “Those companies that are not investing in their people are going to have a real problem with morale and keeping people once the economy turns around.”
Overall, more corporate revenues are going to the IT budget. In 2012, IT consumed 4.94 percent of corporate revenue compared to 3.55 percent in 2011.
Luftman will present his findings at the annual SIMposium in Dallas October 28-30. More information is available at SIMnet.org.
--This story originally appeared in Information Management. Jim Ericson is editorial director of Information Management, a SourceMedia publication. You can reach him at Jim.Ericson@sourcemedia.com.