CIOs To Feel The Pinch Again In 2014

January 27, 2014 Timothy Prickett Morgan

If a new poll done by Gartner is any measure, it looks like chief information officers and their IT departments are going to feel the pressure to do more with less or the same in 2014.

Gartner had just finished up a survey of 2,339 CIOs from all around the globe as 2013 was coming to a close, and the results of the survey are problem familiar to all of you living in the IT trenches. The aggregate budget of the CIOs, who came from 77 different countries, represented more than $300 billion in IT spending, which is about a fifth of all spending. It is not clear how diverse a group this was in terms of company size, but it is hard to argue that this is not a representative sample. A lot of surveys have a few hundred respondents, and we always view those as helpful, but not necessarily definitive or representative.

“2014 will be a year of dual goals: responding to ongoing needs for efficiency and growth, but also shifting to exploit a fundamentally different digital paradigm,” explained Dave Aron, a vice president and Gartner Fellow at the market researcher. “Ignoring either of these is not an option.” Some 51 percent of the survey respondents said that they were concerned that the “digital torrent” was more than they could cope with and 42 percent said that they did not have the technical talent to face with a more digital and data-driven future for their companies.

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The problem, says Gartner, although it will not say it simply, is that everything and everyone is creating a vast amount of telemetry as they go about their business. Gartner talks about the “Nexus of Forces,” and everyone is now chanting about the “Internet of Things” like they were in a trance about Big Data only a few scant months ago. It all comes to the same. More and more things are generating data, and there is this believe, that almost borders on religion, that such information is all valuable because it can be correlated to do predictive analytics. Whether or not this is true largely depends on the quality of your data and the algorithms to sift through it and make those correlations. This is all very complex, and the trouble is not the complexity, but the lack of funding to do it.

“IT spending, portfolio balance, and the choice of technologies, talent, sourcing options, leadership, structure, and governance must all be designed to make the business win. However, despite the need to grow, there is pressure on IT budgets,” Aron says. “The survey showed CIOs expect their IT budgets to remain essentially flat–increasing 0.2 percent on average–in 2014. This is especially challenging since there is a need to both renovate the core of IT systems and services, and exploit new technology options.”

Two-tenths of a percent is not much. That means cutting expenses on existing systems to pay for new ones. For this reason, the CIOs surveyed projected that about a quarter of IT spending, a lot of it aimed at new projects, will actually happen outside of the formal IT budget. A quarter of the companies polled are going to invest in public cloud capacity this year, and the majority of those polled expect for more than half of their business to be running from the public cloud by 2020. A surprising 70 percent of CIOs said that are seeking to partner with small companies and startups and would be changing their technology and sourcing partnerships in the next two to three years. About 45 percent of companies have created agile program development teams, too. All of this is to try to get their IT organizations to look and act more like startups, which continuous development and constant change, and less like a crufty slow-moving data processing department of days gone by.