IT Headed For Fundamental Changes, SIM Survey Shows

IT organization budgets look happy and positive on the surface, but there's less money for maintenance and more for cloud and software development. The signs point to tumultuous times ahead.

Jessica Davis, Senior Editor

December 8, 2016

4 Min Read
<p align="left">(Image: Treenoot/Shutterstock)</p>

IT organizations are increasing their budgets and hiring and salaries, according to the most recent SIM IT Trends study for 2017. But while the report looks very positive on the surface, IT pros need to gird themselves for uncertain times.

That's according to Leon Kappelman, primary investigator on the survey for the Society for Information Management organization (SIM) and professor of information systems at the University of North Texas, College of Business.

Kappelman told InformationWeek in an interview that we are in the midst of a "very tumultuous" period, as corporate technology spending is undergoing a significant change. There are big drops in the budget amounts going to hardware, software, and facilities, and more money spent on cloud.

"Everything looks very happy and positive from 50,000 feet," Kappelman told InformationWeek in an interview. "But when you look under the hood, things are very tumultuous."

For instance, for the first time in eight years, investments in ERP fell out of the top four largest IT investments.

"While clearly still of vital importance to many organizations, this may suggest a level of maturity in these systems which allows IT investment dollars to be allocated elsewhere," Kappelman wrote in the report. "Anecdotal evidence also indicates that ERP and financial applications are moving to the cloud, while new investments are going to upgrade and integrate legacy systems that are unique to the business or used to drive business decision making; for example, analytical extracts from cloud-based financial data."

This year mark's SIM's 37th annual IT Trends Study, and the report is based on survey responses from 1,213 individual SIM members, including 490 CIOs, and representing 801 unique organizations. SIM members range in size and economic sector, but the average annual revenue of responding organizations this year is $4.75 billion, and the median is $500 million.

Analytics/Business Intelligence/Data/Mining/Forecasting/Big Data remained number 1 on the list of the largest IT investments for the seventh year in a row, and IT pros also identified this as the number one area that should get more investment.

Applications/Software Development/Maintenance ranked second on the list of largest IT investments moving up from its number four position in last year's ranking of largest investments., and up from its number 11 position in 2011. Security/Cybersecurity was third this year, and Cloud Computing was fourth.  

CRM ranked as number five, edging out ERP which fell to the number 6 position, down from number two last year.

IT Budget Increases

IT budgets increased this year by 4.15% on average, down from 2016's 4.6% increase, but still represent solid growth, according to this year's SIM survey. Funding for contractors and consultants is down slightly, but allocations for employees are the same. In spite of a steady budget for IT employee costs, the average number of IT employees per company grew year-over-year. Average IT salaries increased by 3.5%.

IT employee turnover hit 7.96%, above the 10-year average of 6.71%.

But there's an even bigger change happening among CIOs themselves, Kappelman said. This year's survey showed more CIOs coming from non-IT fields. In past years the percentage of CIOs that fit that description was in the single digits (with the exception of 2014 when it hit 10.2%). This year it surged to 17.5% of CIOs, Kappelman said.

"That's a gigantic increase -- nearly double," Kappelman said. "That's huge. My sense is that senior leadership is saying that I don't like the potential CIO candidates coming out of IT." Leadership is likely looking for CIOs with more business than technology knowledge in these cases, Kappelman speculated.

Cybersecurity Gap

While cybersecurity breaches and hacks continue to dominate headlines, this year's survey reveals that organizations continue to remain tentative in their approach to security. Kappelman pointed out that only 46% of organizations have a CISO. Only 60% require training for all employees on how to avoid certain attacks such as phishing.

"It really suggest complacency," Kappelman said.

Overall, this year's report shows significant changes yet to come for IT organizations, with spending on basic services going down, but spending on software development and cloud increasing. So what's Kappelman's advice for IT pros and CIOs in this new environment?

"If you don't want to keep learning, go find another career," he said. "You won't be able to survive otherwise."

About the Author(s)

Jessica Davis

Senior Editor

Jessica Davis is a Senior Editor at InformationWeek. She covers enterprise IT leadership, careers, artificial intelligence, data and analytics, and enterprise software. She has spent a career covering the intersection of business and technology. Follow her on twitter: @jessicadavis.

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