Gartner: CIOs don't expect IT recovery

Gartner poll of 1,600 CIOs shows 47% of U.S. high-tech leaders plan for the recession to continue well into 2010

Gartner estimates 2010 IT budgets in the U.S. will be 2.5% higher than 2009, which is on par with 2005 budgets.

CIOs who survived 2009, during which IT budgets dropped by 8% on average, don't expect to see business recover or IT dollars return immediately in 2010. They do, however, intend to makeover IT departments as leaner, more lightweight entities ready to respond to business needs, according to Gartner research released Tuesday.

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A survey of 1,600 CIOs worldwide shows that while many speculate economic conditions will recover, 41% of IT leaders globally are planning for "continued business contraction." Worldwide, 53% expect to see stabilization in 2010, and 6% expect to see growth.

Among U.S. CIOs polled, 47% expect continued contraction, 23% believe business and budgets will stabilize this year, and 26% see some recovery and some growth. The remaining 4% in the United States say they will see revenue growth above 2008 levels in 2010, according to Mark McDonald, group vice president and head of research, Gartner Executive Programs.

Gartner's annual CIO survey, in its 11th year, polled 1,600 CIOs worldwide representing $120 billion in IT spending between September and December 2009. The goal, McDonald says, is to understand the priorities of IT leaders and the resources available to these CIOs. The message for 2010 was clear: transition. CIOs will use another tough economic year to transition from: recession to recovery and growth; strategic cost-cutting to raising enterprise productivity; and owner-sourced technologies to lightweight social technologies.

"Two things came out of the survey: 2009 was the toughest for IT on record, and CIOs reported that 2010 would be another tough year," McDonald says. "IT budgets are projected in 2010 to have a modest recovery off of their lows in 2009, but they are not expected to be anywhere near enough to recoup the cuts they took. CIOs recorded final budgets at 8.1% lower than the year before, and 41% reported they took multiple budget cuts during the year."

Gartner estimates 2010 budgets in the United States will be 2.5% higher than 2009, which is on par with 2005 budgets. The economic conditions are driving CIOs to reshape their focus from cost efficiencies to productivity. As part of the economic recovery, McDonald says IT leaders realize they need to produce more services, respond to the business more quickly and deliver more value with significantly less resources. Another significant find in Gartner's survey is that IT doesn't expect to return to previous operating models following this recession. (See related story, Gartner: CIOs look to lighter-weight, social technologies to transform IT.)

"When we asked CIOs if they thought IT would return to the way it was, 50% said no. From talking with case-study companies, the basic economic funding model of IT is changing," McDonald explains. "The cost profile and technical needs associated with virtualization and cloud computing, for instance, are different, and already about 40% of CIO budgets are allocated for services outside of the company. We found that the whole nature of the IT budget has changed."

While 36% surveyed by Gartner expect IT to move back to pre-recession ways and 14% simply weren't sure, McDonald says many IT leaders are planning to revamp their departments by way of new technologies and skill sets to help businesses return to growth in 2010 and to streamline IT for future business needs. According to Gartner, this evolution of IT is needed and the recession helped kick CIOs into high gear to enable technology groups to transition to more business-relevant organizations within a company.

"We are seeing leading CIOs making deep structural changes in IT to put it on a completely different trajectory, one that is leaner, lighter weight, more responsive and more business-relevant," McDonald says.

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