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Gartner Survey Sees Rising IT Spending

Chief Information Officers assessing IT spending in 2004 foresee both good news and bad, according to a just-released survey of leading CIOs conducted by market researchers Gartner .

The good news is that CIOs are confident that the overall marketplace will be boosted by a 1.4 percent increase in IT spending this year. However, on an individual basis, these same CIOs said they don't intend to open their wallets until they see a business recovery.

Many of the 956 CIOs surveyed by Gartner said signs of a business recovery are now forming. As a result, 40 percent of them believe the projected 1.4 percent spending increase will kick in during the second half of the year.

"CIOs are being very conservative, laying down the foundations for growth, but not aggressively pushing for it," said Marcus Blosch, vice president and research director for Gartner's Executive Programs (EXP) business unit, which conducted the survey.

"Having weathered the storm of declining budgets and increased management expectations, most CIOs expect to focus on improving the contribution IT makes to the growth of their organization, while still keeping a control on costs."

In terms of business priorities, the survey found CIOs are focused on security, operating costs and data protection.

While outsourcing in general has become important at many companies, the survey characterized business process outsourcing (BPO) as a "significant blind spot for CIOs."

"CIOs need to be more engaged in these discussions as outsourcing business processes often involve outsourcing the supporting technologies," said Mark McDonald, group vice president at Gartner EXP.

In compiling its results, Gartner took something of a survival-of-the-fittest view of the IT arena. It broke out the IT world into three types of environments, characterized by what it said are the challenges CIOs must manage this year. Gartner sub-divided the three groups as: Maintaining Competitiveness, Fighting for Survival, and Breakaways.

According to Gartner, 69 percent of the CIOs surveyed work in enterprises that are maintaining competitiveness. In such firms, the IT execs are attempting to balance effectiveness, efficiency, cost management, and operational integrity.

A smaller group of 15 percent is fighting for survival in enterprises that are focused on efficiency and devoting more of their attention to reigning in costs.

Some 16 percent of the CIOs surveyed work in "breakaway" enterprises, which is the environment that CIOs strive for, according to Gartner. CIOs in these companies are seen as business leaders focused on effectiveness, growth, and agility.

"CIOs in a breakaway segment work hard at gaining the trust and respect of the CEO, giving them greater scope to operate," Blosch said. "They use their increased scope to be more proactive. As a result, breakaway CIOs deliver more to business needs and make a bigger contribution to the superior performance of the breakaway enterprise."

Added McDonald: "From 2001 to 2003, the watchwords were 'do more with less.' In 2004, the watchwords are changing to 'earn as you go.' CIOs who deliver business results will garner more resources and executive attention."