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IT spending will continue to improve slowly, heading into 2011 and beyond according to a new survey.
For IT organizations, the year ahead will not
only be a time for rebuilding but also for innovation. Spending will
remain restrained, and IT executives will continue to be asked to
deliver more with less. But they are also receiving the go-ahead to
take risks with projects that promise long-term improvements in the
ability of IT to support new business initiatives.
According to the Outlook for IT Spending and Staffing in 2011 Study, forecasts
for IT operational spending will increase by 2% at the median, based
on a fourth-quarter survey of 136 IT organizations in the U.S. and
Canada, as shown in Figure 1.
The anticipated growth is welcome news after two years of no change
at the median, accompanied by substantial budget cuts by organizations
at the 25th percentile. But the forecast is modest in comparison to the
three years leading up to the recession.
Although 2% growth at the median is modest, the forecast for growth
appears firm, based on actions taken by IT executives in the fourth
quarter. IT organizations have been extending staff hours, adding
temporary workers, and launching major projects that promise strong ROI
or improved agility, our survey finds.
Figure 2 shows the net trend for each action, and ranks actions by
net trend. The net trend is the percentage of organizations increasing
spending on an action minus the percentage decreasing spending. At the
top of the list we see that IT organizations are having IT staff work
more hours. In fact, only 1.5% of organizations cut hours, while 48.5%
increased hours, for a net change of 47%.
Almost as aggressive is work on major projects, where the net trend
is 46%. In fact, 56% of all organizations increased work on major
projects over the past three months compared to only 10% that decreased
expenditures in this area.
The good news continues: not only are IT organizations giving staff
members more hours, they are hiring contractors and temporary workers
and turning to outsourcing. The net trends for these two actions are 31%
and 24%, respectively. These actions are a prelude to making a
commitment to take on permanent, full-time workers.
However, the net trend for increasing the size of the IT staff is
only 13%. The message seems to be that while companies are increasing IT
operational spending, the commitment is still soft, and IT executives
are willing to pay a bit of a premium to maintain a flexible workforce.
Organizations are also beginning to spend money on equipment upgrades
as they migrate to Windows 7 or improve network infrastructure.
However, the net trend of 21% is not as strong as for work on major
projects, which includes spending on enterprise applications and other
software. This same trend is evident when we asked about spending on
software and hardware maintenance contracts. The net trend for software
maintenance contracts was a positive 10% compared to a mere 1% positive
for hardware.
The full study provides guidance for IT
executives as they firm up spending plans for the coming year. It is
based on our fourth-quarter survey of 136 IT organizations in the U.S.
and Canada with more than $50 million in annual revenue. The study
assesses the spending and staffing actions IT managers are currently
taking, the budget actions they took over the past year, and how much
money they are including in their budget plans for the year ahead. Our
outlook report provides 2011 forecasts for IT operational spending, IT
capital spending, and IT hiring by organization size. We also forecast
pay raises for IT workers based on a separate study on IT salaries for
2011.
Published by myITview.com
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