September 9, 2010 – To keep up with needed capital expenditures, CIOs are cutting operating budgets, according to a new research survey from Gartner.

Commercial and public sector CIOs plan to increase capital expenditures by 3 percent this year and pay for that increase with a 1.3 percent cut in operating budgets, and those overall budgets remain flat from last year, in responses to Gartner from more than 500 CIOs across the world.  

"Economic conditions are changing CIO spending priorities as the need to upgrade infrastructure is being appropriated from reduced operating budgets," Mark McDonald, group vice president and head of research at Gartner Executive Programs, was quoted to say. “CIOs felt they could no longer delay infrastructure upgrades and other capital investments and they funded them at the expense of operating budgets."

Swapping budget items mark potential upside limits on current corporate and government purchases on equipment, the study indicated. There were differences related to the size of firms, too, with smaller firms reporter to Gartner that they have “significantly stronger” IT budget growth percentages than their larger counterparts, McDonald stated in a release on this week’s findings. That continues a trend observed by the research group since 2008, as larger IT organizations reign in their resource requirements through consolidation, downsizing and waste elimination.  

IT budgets overall for 2010 were fluid, as many were not yet finalized by this point for the coming year like in years past. Of the CIOs surveyed, 49 percent had their IT budgets set by this point in 2009. However, 26 percent of firms only finalized IT spending by the first quarter of  this year, and 11 percent of CIOs reported that their IT budgets have not been finalized at all. This trend – which was reported regardless of company size, location or industry – may continue in response to changing business conditions, the research noted.

Other key indicators from CIOs in the report include:

  • 1.1 percent growth in expected IT spending for 2010
  • 8.1 percent reduction (weighted global average) in IT spending this year from 2009
  • 60 percent of CIOs foresee further economic challenges in 2011

McDonald will provide more detailed analysis on the CIO agenda at Gartner Symposium/ITxpo, being held October 17-21 in Orlando, Fla. Additional information is available here

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