Operational IT budgets to be squeezed in 2008

The downward pressure on operational IT costs will continue in 2008 but those savings could free up budget for increased levels of capital expenditure.

Analyst IDC predicts the US economic downturn will hit global technology spending next year, with growth rates down from about seven per cent in 2007 to six per cent in 2008.

But more than half (seven) of silicon.com's 12-strong CIO Jury IT user panel said they expect operational budgets to increase in 2008, with the same number saying their capital investment budgets will increase next year.

Gavin Whatrup, group IT director for advertising and marketing agency Creston, said a centralisation strategy in IT may lead to an increased capital expenditure in the short term, but he added the long-term picture is to reduce spend.

He said: "The pressure is still downwards, as it was in 2007, however the business environment is increasingly dynamic and the requirement for high availability is becoming more pressing."

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Paul Hopkins, IT director at Newcastle University, is in the middle of preparing 2008/2009 budgets.

Hopkins said: "I am planning on the basis of a three per cent increase in operational budgets (which is less than my expected salary cost levels) but a significant increase in capital expenditure."

But he added the capital expenditure increases will be dependent upon some "very robust discussions" linked to business strategic objectives.

Nicholas Bellenberg, IT director for publisher Hachette Filipacchi UK, said: "Op-ex budget reduces each year, so you have to be more creative and ruthless in applying it."

Levels of IT spend and priorities also vary wildly from sector to sector. Mike Roberts, IT director for private Harley Street hospital The London Clinic, said: "The 'inflation' in the demand for technology-based change in the health sector is driving op-ex growth at over 10 per cent. There is strong demand for new equipment and services in 2008."

And for many IT directors it will be business as usual with the pressure to do more with less, or at least the same. Mark Foulsham, head of IT for eSure, said: "Our budget will remain fairly flat next year but we're aiming to do more with it."

Today's CIO Jury was…

Neil Bath, IT director, Brewin Dolphin Securities
Mark Beattie, head of IT, LondonWaste
Nicholas Bellenberg, IT director, Hachette Filipacchi UK
Chris Broad, head of IS and technology, UK Atomic Energy Authority
Mark Foulsham, head of IT, eSure
Ric Francis, executive director of operations, The Post Office
Paul Hopkins, IT director, Newcastle University
Tony Johnson, IT director, Zavvi Entertainment Group
Rob Neil, head of ICT and customer services, Ashford Borough Council
Mike Roberts, IT director, The London Clinic
Gavin Whatrup, group IT director, Creston
Graham Yellowley, director of technology services, Mitsubishi UFJ Securities International

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