CIO Agenda: Legacy overhaul on tap in 2007

What's in store for IT over the next 12 months? To find out, we polled members of silicon.com's CIO Jury about their outlook and key concerns for 2007. The results make up our third annual CIO Agenda survey. Today Andy McCue examines whether IT budgets are falling or rising and what the CIO priorities are for 2007. Stay tuned for more results from this poll over the coming days.

IT budgets are set to stay flat or slightly increase in 2007 as businesses look to invest in modernising and refreshing their technology platforms to take advantage of growth opportunities in their industry sector, according to the results of silicon.com's exclusive CIO Agenda survey.

The average IT budget in 2006 was 3.3 per cent of company revenue, although that was skewed by one respondent where the IT budget was a significantly higher proportion of company revenue at 12 per cent. With this anomaly taken out of the calculation the average IT budget was 2.25 per cent of sales.

A third (33 per cent) of CIOs said they expect that to increase over the next 12 months, compared to just 25 per cent who expected an increase in last year's CIO Agenda survey. One respondent even said 30 per cent of company profits will be invested back into IT in 2007.

IT budgets will remain flat for another third of CIOs while the final third expect it to fall in 2007. One of those, Paul Broom, CTO at 192.com, said: "We invested heavily last year - it's cyclical."

On average two-thirds of IT budgets are taken up by operational expenditure - keeping the lights on - with the rest going on capital expenditure and new investment, according to the CIO Agenda results.

More than two-thirds (69 per cent) of CIOs said they expect the share of overall IT budget spent on new investment to increase or stay the same in 2007, with just under a third (31 per cent) saying it will fall.

For many the new investment is driven by the need to modernise their organisation's infrastructure, with CIO Agenda respondents citing "business systems renewal" and "legacy transformation" as priorities for 2007.

Sean Powley, assistant director for organisational development and customer services at the London Borough of Barnet, said the council will be focused on redesigning the organisation around its customers and "putting customers in the driving seat of service design and delivery".

Linda Chandler, head of information management and technology at the London Development Agency, said she will be launching systems "to underpin a massive change management programme".

That contrasts sharply with the priorities in last year's CIO Agenda, which were more about "survival", cutting costs, and service stability.

The CIO Agenda survey includes responses from 18 CIOs and IT directors on silicon.com's CIO Jury IT user panel.

Stay tuned for more of silicon.com's CIO Agenda series this week. Find out what's on the CIO's technology shopping list and what the key CIO priorities are for the year.