IT spending 'not on the rebound'

IT spending 'not on the rebound'

CIOs lose confidence in predicting IT budgets

The "vast majority" of IT budgets will not grow this year, said analyst house Ovum.

Only a third of CIOs globally expect their budgets to grow in 2010, according to Ovum's new survey of chief information officers, and 42 percent will leave budgets unchanged. Last year, four in 10 businesses in the UK and Italy reduced their IT budgets.

The findings agree with those of TechMarketView, which predicted that UK software and services spending will decline this year. But they conflict with Forrester's recent report, which said that the IT spending downturn was over.

However, the survey found that while spending is on an upwards trend, with one third of CIOs expecting their budgets to increase in 2010, most increases will be between just one and five percent.

Spending patterns varied greatly in Europe. While budgets fell for 40 percent or more of respondents in the UK and Italy from 2008 to 2009, they rose for four in 10 CIOs in France.

"This mirrors the respective business environments of these countries," said Rhonda Ascierto, senior analyst at Ovum. "France and Belgium emerged from recession before the UK and Italy."

Ascierto said that CIOs in the UK are waiting for signs of growth in the economy before they begin to spend on IT to further business growth.

"Recession concerns linger in the UK. The country is reeling from high unemployment and substantial public debt that have been precipitated by the economic downturn. Enterprises are responding by continuing to cut IT budgets by as much as possible.

"Scotland's employment and economic indicators have outperformed the rest of the UK during the recession, yet its recovery is pegged as modest and general business optimism remains tepid. Northern Ireland has also emerged from a recession, yet economic activity levels remain weak," she said.

Meanwhile, the recession has had an effect on the accuracy of CIOs' forecasts of IT spending.

Ovum found that normally, CIOs are fairly accurate with predicted spend at around 5 percent or less from actual spend. However, this gap has widened "considerably" in 2009.

"Clearly, the negative effects of the economic downturn were greater than expected and businesses were not prepared," said Ascierto.

According to Ovum, IT projects most likely to be easily "green-lighted" are those that do not require a large upgrade of existing IT systems and processes and those that make changes within existing boundaries, in increments, and in response to business changes.

Ovum surveyed 529 IT decision makers in the second half of 2009 for the report.

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