Corporate IT departments are faring well despite the stagnant economy, with IT budgets and salaries up this year over last year and projected to grow again in 2011.
That's the primary finding of a survey of 172 CIOs, CTO and senior IT executives from 172 U.S. companies that was commissioned by the Society for Information Management. The survey's findings will be released at SIMposium2010, which will be held in Atlanta October 3 through 5.
"The economy is not where any of us would like it to be, but the state of IT is outstanding," says Jerry Luftman, who has conducted this survey for the last 10 years. Luftman is a former SIM executive vice president and executive director and distinguished professor at Stevens Institute of Technology's School of Technology Management in Hoboken, N.J. "It doesn't seem like we are downsizing. Opportunities seem to be up with corporate IT departments and with service providers."
The number of CIOs reporting that their IT budgets were the same or more than the previous year has risen from 48% in 2009 to 65% in 2010. Even better, 73% of survey respondents said their 2011 IT budgets will be the same or larger in 2011.
IT staff salaries are following a similar curve, with 83% of CIOs reporting that IT staff salaries were the same or larger in 2010 compared to 81% the prior year. For 2011, 91% of CIOs said that their salaries would remain the same or increase compared to this year.
The news that IT budgets will rise in 2011 isn't all good for IT departments. CIOs said they plan to spend a larger share of their 2011 IT budgets on offshore outsourcing -- 7% instead of 5% -- and also would increase their investments in domestic outsourced staff and consulting services.
However, IT staff should have a better chance of having their requests for training approved, as CIOs plan to spend 3.98% of their IT budgets on training in 2011, up from 3.48% in 2010 and 3.19% in 2009. The area of training that CIOs are most interested in isn't technical certifications or business skills; instead it's in written and oral communication.
"There is increased spending on training, but it's not going to be on technical or business skills. It's going to be on the interpersonal skills: presenting, writing, negotiating and marketing skills," Luftman says. "This has to do with IT understanding the business, and the business understanding IT."
CIOs seem to be spending their training dollars in alignment with their top IT management concern, which is business productivity and cost reduction. Luftman says it appears CIOs are working closer than ever with the business units to use technology to automate processes and improve efficiency during this downturn.
"In previous recessions, IT was the first place that companies asked to slice and dice, but you don't see that now," Luftman explains. "Instead, IT is working with business partners to find ways to reduce business expenses. You have IT and business working more effectively and closer to together. When the recession ends, hopefully this trend will continue not just to help reduce cost but to help increase revenues."
In terms of top technology investments during 2010, CIOs are spending money on business intelligence, virtualization, enterprise resource planning systems, continuity of operations and cloud computing. The biggest jump was for cloud computing, which rose from number 17 in 2009 to number 5 this year.
The new emphasis on cloud computing coincides with companies spending slightly less on hardware, network and software, an area that dropped from 33% of IT budgets in 2009 to 32% this year.
"When you look at IT spending, what's being hit is architecture and technical standards," Luftman says.
CIOs say there is one area that they aren't worried about for 2010 or 2011: staff turnover. The IT staff turnover rate is at 5.5% in 2010, down significantly from 6.9% in 2009 and 8.4% in 2008.
"HR was very high on the list of top IT management concerns prior to the recession, but it's off the list now because other things like cost reduction are more important and people seem to be taking a back seat," Luftman says.
Luftman's advice to CIOs for 2011 is to continue to build close relationships with the business units to not only reduce costs but to look for opportunities to increase revenues. He also encourages them not to forget their staff.
"Things aren't that bad this year, and the projection for next year is even better," Luftman sums up.