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The New Economics of IT, Part II: IT Budgets Under Scrutiny in Poor Business Climate

The Australian CIO Executive Council polled 121 top local IT executives and found that the current economic crisis is taking its toll on Australian IT departments, with many of them preparing contingency plans and reassessing their current 2009 budget plans. Find out more in Part II of our special report “The New Economics of IT”.

The current economic crisis is taking its toll on Australian IT departments as many of them prepare contingency plans and reassess their current 2009 budget plans.

The Australian CIO Executive Council polled 121 top local IT executives in February and March as part of the survey, The New Economics of IT. The results clearly show that many Australian organisations are scrutinising their technology spending as they respond to the weaker business environment.

See related slideshow: The New Economics of IT, Part II | Part I: IT Contractors Out in the Cold

Annual planning is proving to be very fluid for most of Australia’s CIOs as 71% of the survey respondents report that they have already reassessed their 2009 budget plans or intend to do so within the next six months.

As a matter of practicality, many are preparing for the possibility of significant changes in their spending plans. More than half (55%) of the respondents have already put contingency plans in place in the event that they are required to make cuts to their IT budget. A further 13% are planning to implement a contingency plan.

One unanticipated finding of the survey was that about two out of three CIOs expect their IT budget to remain the same or even grow in the next 12 months compared to the previous 12 months. Only 35% of the respondents expect their overall IT budget to decrease.

That is not to say that it is spending as usual for Australia’s CIOs. As a group they are being extremely cost-conscious and shifting their expenditures strategically. More than two out of five organisations intend to reduce spending on hardware and software this year. A similar number have already made the decision to freeze or postpone desktop refreshes this year.

Three out of four CIOs indicated that they have either already reviewed IT project plans to save cash or intended to conduct such a review in the next six months. And a massive 78% indicated that they were postponing discretionary IT projects.

However, the CIOs are committed to maintaining service levels despite budget cuts, with 83% saying there were no plans to reduce them.

“Historically, Australia’s CIOs have run their IT divisions to bring efficiencies and competitive advantage to their organisations,” said Linda Kennedy, general manager of the CIO Executive Council. “This survey shows that at a time when many businesses are being strongly challenged, the CIOs are again delivering solutions to help their organisations.”

The CIO Executive Council is an organisation which enables members to be more successful by facilitating the sharing of knowledge and creating content and programs around issues crucial to advancement of CIOs and the ICT sector. It is owned by IDG Communications, the publishers of this Web site.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

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