Ready for 2008? Budgets may tighten up, but IT's challenges will just keep growing: security problems, virtualization technology, legal issues, users who can't be stopped and that worrisome baby-boomer brain drain. Here are eight hot-button issues to watch out for in the coming year:

1. How far down for the economy? A few months ago, in Computerworld's latest Vital Signs survey, 47% of CIOs polled said they expected their IT budgets to rise, by an average of 12.5% in 2008. But now the bill is coming due for shaky mortgages, the dollar keeps dropping, and a business slowdown looks inevitable - Gartner puts the chance of an actual recession at 30%. Don't slash your budget plans yet, though. Ask how your CEO plans to respond, then map out how IT can help. Cutting costs is one thing, but if your company snaps up a few acquisitions, you'll need more IT budget, not less. First, you need to know the plan. Find out.

2. It's the Year of Virtualization. Ignore how vendors sling this buzzword around. Look at virtualization - of servers, desktops or storage - in terms of how it lets you respond faster to changes in what users need. That's where business advantage comes from, but it won't come easily, so get started. By 2010, when users need results, you'll be able to deliver them while the business opportunity is still hot.

3. Plain text is dead. That's your new mantra for data security. No valuable company information should go unencrypted across a wire, onto a disk or into a backup. Encryption is the ultimate defense against everything from hackers to users with USB flash drives. We've now got the CPU horsepower and the crypto technology. This year, start using it.

4. Consumer tech hits the tipping point. You can't keep this stuff out of the office, so stop pretending you can. Users want iPhones? Give them the Web mail and applications they need. They want to use webcams or Second Life for meetings? Track what they're doing, watch for security holes, and close them. Don't say "no," say "here's how" - or challenge users to suggest how to make their gadgets business-safe. They may surprise you.

5. Desktop Linux? Not this year. The functionality is now there, and so are applications and user-friendliness. But inertia is still Windows' friend. Retraining users with a billion worker-years of Windows experience is Linux's next big hurdle.

For more enterprise computing news, visit Computerworld. Story copyright Computerworld, Inc.