2012 IT budgets, salaries on the rise, survey says

SIM's annual CIO survey indicates pre-recession levels of optimism

IT budgets, salaries and staff turnover rates have returned to pre-recessionary levels, according to a new survey conducted by the Society of Information Management (SIM) that indicates increasing optimism among CIOs and IT executives nationwide.

IT executives say their departments are better positioned then ever to meet the needs of their organizations, whether that is by reducing business expenses through automation or by bringing new services quickly to market.

MORE FINDINGS: Two-thirds of firms send jobs offshore, survey shows

"This survey shows the success of IT departments and how they are working with their business partners to leverage IT and to reduce business expenses," said Jerry Luftman, lead researcher for the SIM survey and a professor at the Stevens Institute of Technology. "Companies aren't looking to IT as the first place to slice and dice."

The outlook for IT budgets is solid, with 83% of survey respondents reporting that their 2011 IT budget was greater than or equal to their 2010 IT budget. This figure compares to 48% reporting stable or growing IT budgets in 2009.

Similarly, 85% of IT executives are predicting that their 2012 IT budgets will be greater than or equal to their 2011 figures. Only 65% of respondents made this prediction two years ago.

Another positive indicator is that IT budget allocations will remain steady in 2012, with internal staff expected to receive the largest share of the pie at 37% of spending compared to 38% this year.

The SIM survey indicated no plans by management to increase offshore outsourcing, which has been a fear among IT professionals over the years. CIOs reported that they spent only 2% of their 2011 IT budgets on offshore outsourcing and 3% on domestic outsourcing. For 2012, they are projecting the same level of investment for offshore and domestic outsourcing.

Another indicator that IT departments were returning to pre-recessionary levels of activity is that 2011 IT budgets represented 3.55% of corporate revenues, which compares to 3.5% prior to the recession.

Similarly, IT staff turnover rates returned to 7.06% in 2011, which compares to pre-recessionary level of 7.2%. The turnover rate peaked at 8.4% in 2008, when layoffs were common.

"It's pretty neat that the staff turnover rate is so low," Luftman said. "It's low for a couple reasons. Baby boomers are not retiring because they can't afford it, and people aren't finding other jobs with higher salaries. But the entry-level job market is terrific."

As far as salaries are concerned, 92% of CIOs say that their 2011 IT staff salaries were greater than or equal to 2010 levels. This compares to 81% reporting stable or increasing salaries in 2009 and 83% in 2010.

For next year, 94% of CIOs predict that their 2012 IT staff salaries will be greater than or equal to this year's level. In 2007, only 78% of CIOs made this prediction.

One surprise finding was that CIOs are not planning to allocate a significant amount of their IT budgets to internal or external cloud computing services. Although cloud computing was listed as one of the top applications that CIOs are investing in during 2011, they are spending only a tiny amount of money in this area: an average of 6% of their 2011 IT budgets on internal cloud projects and 5% on external cloud efforts.

"The investment numbers for cloud computing are less than what the hype would suggest," Luftman said. "People are still trying to understand cloud computing and figure it out, and they are recognizing that it is not an inexpensive migration. Today may not be the best time to invest in cloud, although people are paying attention to it."

Luftman said the overall findings of the SIM survey are that IT is a good place to be in the enterprise and that it's getting better.

"IT is very dynamic," Luftman said. "There are new infrastructure technologies available, including cloud computing and virtualization. There are new applications and services. There are the push toward business intelligence, the consumerization of IT and social networking. This is all going on at the same time, which makes for a very, very interesting time period."

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