More Bad News on IT Spending, from CIO.com Survey


Remember when all of the tech pubs, including IT Business Edge, were yammering about the "consumerization" of IT, the idea that employees were altering enterprise IT by clamoring for consumer technologies like instant messaging, desktop search tools and software mashups?


Here's another area in which companies (unfortunately) appear to be following consumers' lead: spending. As folks react to the down economy by halting purchases of big-ticket items like cars, a trend resulting in the the worst 3Q decline in consumer spending in four years, companies also are putting the brakes on IT spending.


As CIO.com reports, 40 percent of CIOs surveyed last month say they plan to cut IT budgets, while 34 percent say their budgets will remain flat. Those figures are up from a similar survey in July, in which 26 percent of tech execs planned to shrink spending and 26 percent planned to hold steady.


Forty-nine percent of respondents have halted discretionary IT projects in the past six months, while another 23 percent plan to do so. Other common budgetary actions: renegotiating vendor contracts and instituting hiring freezes (46 percent, each); cutting IT travel (45 percent); reducing spending on contractors and consultants (44 percent). The number of respondents reducing headcount is lower, at 23 percent, but obviously worrisome.


The credit crunch appears to play a direct role in spending shifts. I can't recall seeing specific mention of it in previous spending surveys. Twenty-three percent of respondents say they've delayed tech purchases due to unfavorable financing terms or conditions from a vendor or lending institution, while 35 percent plan to delay tech purchases for these reasons. Fourteen percent have canceled tech purchases because of lending conditions, while 10 percent plan to do so.


Also worth mentioning: Thirty-five percent of respondents think current economic conditions will cause IT purchase decisions to be pushed higher within their organization. That's why, more than ever, it's important for tech execs to be able to clearly connect IT spending with business value. I offered somespecific suggestions, culled from Gartner's Symposium/ITxpo 2008, in last Wednesday's post.