Once Again Business, Not IT Top Concern for CIOs

By Allen Bernard

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Helping their businesses run more productively, efficiently and improving agility are the main concerns of CIOs today. Most also believe we are seeing the light at the end of the recession tunnel but few will commit to spending, except on safe bets.

CIOs, CTOs, and senior IT executives cite business productivity and cost reduction as their top business concern, according to the 2009 IT Industry Trend Survey, commissioned by the Society for Information Management (SIM). IT and business alignment, the No.1 concern in 2008, fell to No. 2, which annually provides important benchmark data in areas including spending, salaries, job scope of IT professionals, and technical/business trends.

Rounding out the top 10 concerns are:

3.) Business agility and speed to market

4.) Business process re-engineering

5.) IT cost reduction

6.) IT reliability and efficiency

7.) IT strategic planning

8.) Revenue generating IT innovations

9.) Security and privacy

10.) CIO leadership role

"The successful IT organizations are those working aggressively with their business partners to ID opportunities to reduce the cost for business units," said the survey's author Jerry Luftman, former SIM VP for Academic Community Affairs and executive director of Graduate Information Systems Programs and Distinguished Professor of Information Systems at Stevens Institute of Technology. "This is very different than in previous downturns."

Nearly 250 company responses were gathered from senior IT leaders within SIM's membership base and the community at-large. Respondents indicated the No.1 application/technology of importance is business intelligence (BI). It was followed by server virtualization, enterprise resource planning (ERP) systems, customer/corporate portals, enterprise application integration/management (EAI/EAM), and continuity planning/disaster recovery.

"If you take (BI and server virtualization) they are way out in front of the others" as far as he number of respondents interested in or deploying them, said Luftman. "The thing that's interesting, you'd think that with the activity that server virtualization is getting, that things like SaaS, and Cloud computing and grid computing and utility computing would be showing up high on the list also and they're not, they're very, very, very, very far down."

The why ties directly back to infrastructure. Very few are spending. Since 2008, infrastructure spending is off by 10% or more and there is no indication this will change in 2010. This says to Luftman that CIOs are only spending on quick return, high ROI projects―like server virtualization―where the payoff is too good to ignore. If, however, the payoff from these other offerings―that could be many months or even years down the road; requiring in-house systems to be shut and business processes re-worked―CIOs are going to be far less likely to change what works now for the promise of a better tomorrow. "The worst seems to be over but ... nobody's quite sure if the recovery's going to a U, a V, or a W so they are cautiously optimistic," said Luftman, "But, clearly to be safe, (CIOs) are not allocating their spend on infrastructure. They are reluctant to open their budget gates until they see what's going on."

Looking Up in 2010

On the bright side most CIOs believe they will have more money to spend in 2010. In 2009, 52% of respondents said their IT budgets decreased compared to 2008, but looking ahead to 2010, 27% expect budgets to increase and another 45% expect them to remain the same; practically mirroring pre-recession levels. Where CIOs are spending, cautions Luftman, will remain pretty much the same as this year. "So, it looks like next year is another bad year for hardware vendors."

Similar results were found when CIOs were asked about staff salaries. Eighty-one percent (81%) of respondents said staff salaries stayed the same or increased in 2009, while 91% expect salaries to stay level or increase in 2010. Again, back to pre-recession levels.

"Here's what's happening: overall, budgets are the same or down for this year," said Luftman. "And it looks like, for next year, less of them are going to be down. So, that's good news. It looks clearly that companies are not laying off IT people because spending for employees is up, but what seems to be happening, where they're meeting their budgets, is they're not hiring as much. So, the good news is we're not laying off as much ... but they're not hiring and where there is a skills gap, they seem to filling that gap by outsourcing domestically instead of offshore this year."

Nearly 250 companies participated in this year's survey, answering questions on spending, salaries, job scope of IT professionals and technical business trends, including their top six applications and technology investments:

1) Business Intelligence

2) Server Virtualization

3) ERP Systems

4) Customer Corporate Portals

5) Enterprise Application Integration

6) Continuity Planning/Disaster Recovery

In-depth results for this year's survey will be presented at SIMposium '09, Fresh Ideas for Peak Performance, November 8-10, 2009 in Seattle, Washington.

"People are waiting for some indication that the end is here and prosperity is here and we can start doing this stuff," said Luftman. "People are reluctant to say, 'Everything's done, let's move on'. We're not convinced yet. That's what these numbers are saying."