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IT Spending: Deja Vu All Over Again

When it comes to IT budgets, CIOs are preparing to do more with less -- again. Is this a blip, or a return to the bad old days of IT penny pinching?

Remember 2001, 2002, 2003? Most CIOs would rather not. That was when IT became a cost to control, rather than an innovation engine to invest in. Now there are signs that that limited view of IT may be returning.

Last week IDC published a report that predicted IT spending growth will slow next year. According to a news story by my colleague, K.C. Jones, that slowdown coincides with an increase of interest in Web 2.0 technologies.

The analyst firm is predicting global IT market growth for 2008 at 5.5% to 6%, down from 6.9% this year. The market intelligence group released "IDC Predictions 2008: The Hyper-Disrupted IT Industry Takes Root." It states that 2008 will begin a "post disruption" era in the IT marketplace.

Hyper-disrupted or not, that prediction of slower growth in the IT markets is of a piece with the results of two recent surveys of CIOs and business execs, both of which indicate more people are looking at less to work with next year in terms of IT budgets.

In the most recent survey by the Society for Information Management, less than half of 130 CIOs and IT managers who responded (49%) predict their IT budgets will be larger next year than this year. Almost a third (30%) say their budgets will stay the same, and 21% say they'll have less IT dollars next year. In comparison, 61% say their 2007 IT budgets were greater than their 2006 budgets, 17% say they were the same, and 22% say they got less this year than last.

InformationWeek's recently completed CIO Effectiveness Survey 2007 had almost identical results. Of the 724 CIOs, CXOs, IT staffers, and line-of-business managers who participated, 49% say they expect their IT budgets to increase next year, 28% expect them to stay the same, and 16% expect them to decrease (7% don't know).

That sure sounds like a pullback in IT spending. But what does it mean? Is it due to the increasing influence of "disruptive" Web 2.0 technologies, like online software services? Is it another round of "IT Doesn't Matter" thinking pervading the executive offices? Or is it a simple matter of belt-tightening in anticipation of a recession?

What do you think? Is your 2008 IT budget larger or smaller than this year's? And why?

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