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Tech spending to rise, say CIOs

Though they're confident that spending on IT projects will increase this year, many executives are waiting to see if business picks up before investing in new projects themselves, according to a Gartner survey.

Chief information officers are confident that technology spending will rise this year, but many are waiting for proof of a business recovery before funneling more money into information technology efforts, according to new research from Gartner.

The survey of 956 business IT leaders worldwide, published Tuesday by the Gartner Executive Programs unit, found that they expect to raise their technology budgets by an average of 1.4 percent in 2004. However, more than 40 percent of those polled said they would hold off on making new investments until the second half of this year.

Among the top priorities for that IT spending are the improvement of security and data protection and the reduction of operating costs, according to the CIOs surveyed.

The study also found that outsourcing remains a key area of interest for businesses, though most CIOs were looking into the parceling out of operations in order to lower overhead, rather than the more involved practice of business process outsourcing. In BPO, a specific business operation, such as transactions processing, is farmed out for strategic as well as financial purposes.

More than two-thirds of the executives polled did not view BPO as important to their roles through 2007. However, Gartner pointed out that in most cases they are not included in the BPO decision-making process, as suppliers tend to go directly to executives in business units for those deals. The firm's analysts questioned this situation and encouraged companies to keep CIOs in the loop when considering BPO offers.

"BPO is not just a business process decision," Gartner analyst Mark McDonald said in a statement. "CIOs need to be more engaged in these discussions, as outsourcing business processes often involve outsourcing the supporting technologies."

As for CIOs' business responsibilities, Gartner found that 69 percent were focused on keeping their business competitive, with 15 percent "fighting for survival" by managing budgets better and 16 percent working to improve the efficiency, growth and flexibility of their businesses through IT initiatives.

CIOs will have to deal with three major trends in 2004, according to Gartner: Businesses will become more interconnected and electronic than ever before; information systems capabilities will influence core business capabilities; and trust from and time with their fellow executives will help build IT executives' credibility.

"From 2001 to 2003, the watchword was 'Do more with less,'" McDonald said. "In 2004, the watchword is changing to 'Earn as you go.' CIOs who deliver business results will create a virtuous circle where they garner more resources and executive attention."