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Survey: glimpses of stabilisation amid dark budget forecasts

Results from our exclusive CIO survey show that the percentage of CIOs planning to increase their IT spending shrunk to its lowest level in a year. However, IT budgets show signs of stabilization after more than a year of budget cuts and layoffs.

No one has to remind CIOs just how bad the last 10 months have been: New data from our exclusive survey of top IT executives shows that CIOs may have hit rock bottom with their budgeting and cost-cutting measures.

First, the bad news: Just 14 percent of the 171 IT leaders who took part in the May 2009 "CIO Economic Impact Survey" expect IT budget increases in the near future, which is down from 20 percent in a similar survey conducted in January, and 63 percent in March 2008.

It's not surprising that in this most inhospitable of economic environments, 65 percent of CIOs report that IT purchases are subject to closer scrutiny by other business executives. In addition, 40 percent of CIOs say they will have to shrink payroll, which is up from the 35 percent who said the same thing in January 2009.

And CIOs are still chopping away at operational costs begun six months ago. According to the survey, IT execs have halted discretionary IT projects, renegotiated IT vendor contracts and frozen IT hiring during the last half year.

However, the most recent survey results suggest that all the cost-cutting and budget slashing may be slowing or, at the very least, leveling out: For instance, the percentage of CIOs planning for IT spending decreases remained relatively flat (50 percent in May versus 53 percent in January), and the percentage anticipating no change to their IT budget increased from four months ago. ( See full survey results in .pdf format.)

In addition, fewer CIOs responding to the May survey say that the percentage of their total IT budget allocated to new initiatives will decrease in the coming year (43 percent in May versus 49 percent in January), while 34 percent expect that percentage to remain the same, up from 26 percent four months ago.

Software vendors will be pleased to hear that the software applications category shows the highest percentage of CIOs planning to increase spending (28 percent, up from 23 percent earlier this year). On the other hand, hardware (47 percent), outsourced IT services (40 percent) and IT compensation costs (40 percent) are the most frequently cited categories where CIOs anticipate cuts in the coming year.

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