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Many CIOs Cutting IT Budgets

Renegotiating vendor contracts and reducing staff were the major causes of cost cutting in the first quarter, a Gartner researcher says.
More than four in 10 CIOs surveyed recently by market researcher Gartner said they decreased their 2009 IT budgets in the first quarter.

The poll of 900 CIOs worldwide found an average reduction of 7.2%, Gartner said. Fully 54% of the respondents reported no change in the IT budget, while the remainder reported an increase.

"CIOs reported that renegotiating vendor contracts and head count reductions were the primary focus areas for accommodating budget reductions," Gartner researcher Mark McDonald said in a statement. "CIOs report shifting more work to in-house resources and delaying capital expenditures more than reducing IT project investments."

The survey, conducted from March 1 to April 30, was the second by Gartner. The original CIO poll conducted from September to December 2008 had 1,500 participants and found that 2009 IT budgets were expected to be flat or with a minor increase of 0.16%.

With the exception of health care-related industries, which saw an average budget increase of 2.2%, all other major industries reported a decline in the first quarter. The largest drop was in professional services and telecommunications and high tech, which each saw a 10% drop. IT budgets of manufacturers fell 8%; utilities, 4%; and financial services, 4%.

While the CIO survey recognized the potential of more cuts, most said that was unlikely. CIOs expect the economy to recover between the first and third quarters of 2010, and plan to increase IT spending on projects and workforce levels during the expected recovery. Additional spending on software, hardware, and infrastructure is also high on CIOs' agendas as economic conditions improve.

Besides IT budgets, the economic downturn also is changing the job of CIO. Interviews with members of InformationWeek's Global CIO 50 found CIOs are more business driven, customer focused, and accountable for growth.


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