About 42 percent of chief information officers have cut their budgets to grapple with the economic downturn, a new survey by Gartner shows.
Among the 900 CIOs questioned, 42 percent said they had lowered their budgets for the first quarter of 2009, an overall drop of 4.7 percent compared with the previous quarter, according to the report released Monday. This contrasts with Gartner's study for 2008's fourth quarter, where most of the 1,500 CIOs surveyed said their IT spending was relatively flat.
For the recent survey, 54 percent of all CIOs indicated no budget changes, while 4 percent confirmed a boost in spending for the first quarter.
"CIOs reported that renegotiating vendor contracts and head count reductions were the primary focus areas for accommodating budget reductions," said Mark McDonald, group vice president and head of research for Gartner EXP. "CIOs report shifting more work to in-house resources and delaying capital expenditures more than reducing IT project investments."
Most industries reported lower IT spending, noted Gartner. Professional services companies and those in the telecommunications and technology fields registered the biggest decline with a 10 percent drop. Manufacturing firms indicated an 8 percent fall in spending, while utilities and financial firms cut back by 4 percent. Only the health care industry reported a 2.2 percent increase in tech spending.
CIOs seem ready however 2009 plays out. Most of the executives questioned realize further cuts may be needed later this year but see them as unlikely. More CIOs have contingency plans in place for 2009 that cover a possible uptick in IT spending but further reductions as well.
"Based on CIO contingency plans, they are now better prepared for future economic challenges," said McDonald. "However, most CIOs do not see immediately implementing those plans. This supports a position that the first quarter budget adjustments reflect firm plans for the remainder of 2009."
CIOs see the economy bouncing back sometime between the first and third quarter of 2010. Once the signs look good, they expect to boost spending on both IT projects and staffing.