CIOs See Steady Growth in IT Budgets

Chief information officers are expecting an average increase in their 2005 budgets of about 2.5 percent, according to a recent survey by research firm Gartner .

Gartner’s Executive Programs Group (EXP) also revealed that security sits at the top of both business and technology priorities for CIOs.

Gartner’s survey polled 1,300 CIOs in 30 countries, which overall represents about $57 billion in IT spending. Survey respondents said they expect their 2005 IT budgets to increase by 2.5 percent, up by almost 79 percent over 2004’s rise of 1.4 percent. The increase is still a long way off from pre-Y2K IT budget spending, when the 1999 Gartner survey reported a lofty 15.9 percent increase in IT budgets.

The survey said IT budgets are increasingly tied to business results and business budgets. The majority of respondents (64 percent) indicated that their enterprise IT budgets would grow at the same rate as their business budgets. IT budgets were projected to grow faster than business budgets by 19 percent, while 17 percents noted that business budgets would grow faster than IT budgets.

As for the top 10 business and technologies priorities for 2005, Gartner found that security ranked at or near the top of both lists. Security enhancement tools clocked in as the number-one technology priority, while security breaches and disruptions were the number-two business priority noted by


Business process improvement, which was among the new questions on the 2005 survey, ranked as the top priority. In 2004, security breaches and disruptions were the number-one business priority.

The Gartner survey also asked CIOs how the following topics ranked in importance in 2005, including security, infrastructure and business skills. Continuity and
security came in as the top concern among their priorities.

The Gartner study revealed a number of critical challenges facing
CIOs in 2005. A 67 percent majority indicated that they see themselves “at risk” from their CEO’s point of view about IT. Beyond the risk to themselves, 39 percent noted that they don’t have the right staff to meet current and future business needs. Staffing concerns also extended to concerns over an aging IT workforce, with 51 percent reporting they were having difficulty attracting new people with the skills for new requirements.

In terms of management priorities, delivering projects that enable
business growth was the number one CIO management priority for 2005, up from number 18 in 2004.

“Business expectations are now forcing CIOs to transform the IS organization, and 2005 is the year where CIOs must deliver more value and become a contributor, rather than a commodity,” Mark McDonald, group vice president for Gartner EXP, said in a statement. “They must do this without large up-front investments, and CIOs are turning to business processes and business intelligence to meet this challenge.”

Not everyone agrees with Gartner’s results. A recent poll from CIO Magazine found that only 6.7 percent of respondents indicated that they expected IT spending to increase in 2005, a decline of 1.7 percent from the poll’s November results.

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