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CIOs See Declining Budgets in Q1

4/10/2008

By David Nagel

Although IT budgets are expected to grow in 2008 overall, about a fourth of CIOs in the United States reported decreases in their budgets in the first quarter of 2008, according to a survey released by Gartner this month and highlighted at the Gartner Symposium/ITxpo: Emerging Trends event this week in Las Vegas.

Budgets Remain 'Broadly Stable'
Only 10 percent of U.S. respondents in Gartner's "First Quarter Worldwide CIO Survey" indicated that their budgets had increased in the first quarter, with the bulk--65 percent--saying their budgets remained the same. For the 25 percent whose budgets were cut, most (72 percent) reported decreases of 10 percent or less.

Budget growth on the whole in IT is slowing--from 3.1 percent to 2.3 percent--when compared with a previous Gartner survey conducted in the fourth quarter of 2007.

"We are seeing caution rather wholesale cutting," said Mark McDonald, group vice president and head of research for Gartner Executive Programs, in a statement released in conjunction with the findings. "This is due to CIOs increasing diligence in managing IT spending over the past few years."

He continued: "The first quarter should be the toughest in terms of budget changes as executives are cautious at the start of the year. CIOs are managing their budgets differently than in the past, on a greater business basis and that is showing up in the results of this first quarter study."

It's a similar picture worldwide, where one-fifth of CIOs reported decreasing budgets. The Asia/Pacific region reported the strongest growth in the quarter: 5.98 percent.

"Overall, the majority of CIOs reported no change in their 2008 committed budgets. This indicates that IT budgets are not the 'target rich' environment for cost cutting they have been in the past. However, there is some softness, particularly in the U.S.," McDonald said. "CIOs responding to the study report that IT budgets are still growing, even in the U.S., but growth rates are muted slightly. Historically, the revised numbers are in keeping with the past four years where IT budget increases have averaged 2.4 percent."

Furthermore, the report showed, only 32 percent of CIOs surveyed had some sort of contingency plan in place for 2008 to address budgetary changes.

"Given economic conditions, CIOs should be prepared and have a contingency plan for both increases or decreases in the next 90 days (by the end of the second quarter of 2008)," McDonald said.

The Gartner survey polled 1,011 CIOs from around the world in February and March. Further information is available here.

The Green IT Debate
In other ITxpo news, Gartner hosted a debate on the impact of "green" IT practices Tuesday. Gartner analysts French Caldwell and Charles Smulders argued that green IT is fiction, with the IT industry churning out "only" 2 percent of the world's carbon output. Analysts Simon Mingay and Martin Reynolds argued the opposite, saying green is a function of risk management and that IT departments should "innovate now and not wait."

Attendees at the Green IT Great Debate sided largely with the pro-green position, with 58 percent saying that green IT does matter and only 20 percent saying it does not. A larger percentage--71 percent of the session attendees--said they "believe human activity is driving dangerous climate change."

Further information can be found at the Gartner Symposium/ITxpo blog here.

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About the author: Dave Nagel is the executive editor for 1105 Media's educational technology online publications and electronic newsletters. He can be reached at dnagel@1105media.com.

Have any additional questions? Want to share your story? Want to pass along a news tip? Contact Dave Nagel, executive editor, at dnagel@1105media.com.

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