IT budget squeeze stifling innovation in UK plc

IT budget cuts and costly regulatory compliance work are stifling innovation and shifting power away from CIOs, according to industry experts.

The predictions echo both the results of silicon.com's own CIO Agenda survey at the end of last year and revised IT spending forecasts for 2006 by analyst Forrester this week.

The panel of experts at a 2006 industry and technology predictions event hosted by Adobe this week warned of a difficult year ahead for IT departments and CIOs.

Charles Hughes, president of the British Computer Society, said: "CIOs are still not accepted as an important part of the business."

James Bennet, director of technology, communications and entertainment at Ernst & Young, said: "Budgets are tightening and the power shift continues away from the CIO to the CFO. Budgets are not growing."

IT spending on compliance projects continues to increase, and Bennet predicted this will continue but warned it is having an impact on innovation in UK businesses.

He said: "Regulation is very much driving IT spend and this is stifling innovation. We are seeing vanilla IT. Vanilla IT has become too prevalent in many large enterprises. The organisation is preventing users having anywhere near the computing power they have at home."

Panellist Patrick Cooper, head of applications and data services at the Department of Trade and Industry, admitted to some IT headaches associated with regulatory compliance but said laws such as the Freedom of Information Act and the Data Protection Act are good for citizens and democracy.

He said: "It's a real hassle and I have to live with this pain every day but I can see the benefits and, on balance, I am happy with it. As a taxpayer, I think it's a good thing."