Computer Economics Sees Optimism in 2011 IT Budgets, Too
January 24, 2011 Timothy Prickett Morgan
It looks like 2011 is getting off to an optimistic start, at least as far as the budget forecasting for IT spending goes. Two weeks ago, the prognosticators at Gartner were projecting that IT spending on hardware, software, and services would rise by 5.9 percent this year to $1.46 trillion. And now, Computer Economics has put together its projections and the news is good after two years of bad. Surveys of the midmarket by IBM show budgets on the rise, too.
In its Outlook for IT Spending and Staffing in 2011 report, announced last week, Computer Economics did surveys of 136 IT shops in the United States and Canada, and when you do the median average of what these executives plan to do in 2011, then you find that they expect IT spending to rise 2 percent in 2011. This may not sound like a lot, and guess what? It isn’t. But it is better than the median IT budget increase during the Great Recession, as you can see below:
In 2009 and 2010, on average, the companies polled by Computer Economics didn’t increase IT spending at all. (In reality, some increased spending and some cut spending–some making deeper cuts than others and holding back the class average.) So while 2 percent is not great–and lags the increase in spending on hardware, software, and services expected in 2011 and is a lot less than the 4 to 5 percent IT budget growth in 2006 through 2008–it is a lot better than the double bagel of the past two years.
As the fourth quarter was coming to a close, IT execs told Computer Economics that they were paying for overtime for IT staff, adding temp workers, and starting up IT projects that had a quick return on investment and did things to help make the company more agile. The chart below shows the net change in companies with regard to spending for particular areas of the budget. Note: this chart is not showing the net change in the budget, but rather the net percentage of companies either growing or shrinking spending on a particular item.
Way down there at the bottom, the predictable has indeed again occurred: IT shops are cutting back on IT training. No surprises there. And spending on hardware and software maintenance is still under pressure, as you might expect. But spending is increasing on salaries and hiring for temps to help do important new projects, and there is also some money for upgrading equipment. For instance, only 1.5 percent of those polled said they were cutting back on IT personnel levels, while 48.5 percent said they would be increasing spending on salaries by paying overtime. Of course, that also means precisely half of those companies polled have not changed a thing. Work on major IT projects is picking up, with 56 percent of those polled allocating more funds to these efforts, and only 10 percent decreasing spending. (That leaves 44 percent holding steady.)
We are perhaps returning to a new equilibrium, or perhaps IT spending is just catching its breath before the top brass comes down from the paneled rooms and into the data center to demand that IT shops do more with less–again.
You can get the full Computer Economics budget study here.