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The New Economics of IT, Part III: It's Bleak Street for Hardest Hit IT Departments

More than a third of Australian CIOs responding to the CIO Executive Council survey The New Economics of IT report that their budgets are being cut. Part III of our special report reveals a gloomy picture of life at the IT frontline as the emphasis shifts from growth to survival.
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It may be impossible to find any CIO who is not dealing in some way with the impact of the current economic crisis. However, the greatest challenges surely are being faced by those CIOs who have been most severely impacted through budget cuts.

More than a third of Australian CIOs responding to the CIO Executive Council survey The New Economics of IT report that their budget is decreasing. Examining their responses and decisions reveals a gloomy picture of life at the IT frontline as the emphasis shifts from growth to survival.

See related slideshow: The New Economics of IT, Part III | Aussie IT Battlers Doing Better Than US Counterparts in The New Economics of IT, Part IV
The budget reductions range from -3% for a state government CIO to -35% for a CIO in the finance/banking sector. The average budget cut among all who report reductions is -13%.

As would be expected, CIOs faced with such cuts have gone back to the drawing board this year, with 93% saying they were reviewing IT projects to save cash and 87% reassessing their 2009 budget plan. Four out of five are currently operating under a contingency plan, and 7% more intend to implement one.

The lower budgets have pretty much closed the shopping trolley for these CIOs. Four out of five are decreasing their spending on hardware this year, and 73% are cutting back on software expenditure. Nearly half are reducing their spend on outsourced IT services, and two out of five plan to reduce telecommunications spending.

Faced with less money, the hardest hit CIOs have also been unable to shelter their staff, as 47% are planning to decrease IT compensation. In fact this group represents 89% of all Australian CIOs who indicate they will be reducing compensation costs.

Only 26% are reducing headcount, but 93% of this group have implemented a hiring freeze or plan to do so soon. Two out of three are reducing the money spent on staff training and four out of five are restricting IT travel.

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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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