Cost-cutting tops CIO priorities

Tech budgets will remain flat or fall in 2008 for most organisations as they focus on cost cutting and efficiency initiatives, according to silicon.com's exclusive CIO Agenda 2008 survey.

The average IT budget last year among CIO Agenda survey respondents was five per cent of company turnover, although that was skewed by one respondent whose tech budget is 24 per cent of company turnover.

Taking that result out puts the average at 3.8 per cent of sales - an increase on the 3.3 per cent average in the 2006 survey.

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But the spending picture looks fairly bleak for 2008 with three-quarters of CIOs saying their IT budgets will remain flat or fall this year and the rest predicting small increases.

On average, a third of these IT budgets are taken up by capital expenditure (as opposed to operational 'keeping the lights on' expenditure') and new investment, although this ranged from just three per cent in one organisation to a massive 80 per cent in another. Most expect those levels to remain the same or reduce slightly in 2008.

Graham Yellowley, head of IT for investment bank Mitsubishi UFJ Securities International said about his organisation's relatively high level of new IT investment: "This is higher than normal due to a three year expansion plan that is in place."

The main business priorities driving IT spend in 2008 are the usual issues of efficiency and cost-cutting but the need to increase profitability through IT is now also high on the list for CIOs.

Specific initiatives and technologies listed as priorities by CIO Agenda 2008 respondents include mobile/remote working, collaboration technology, business intelligence and improving quality and access to information, standardising business processes, big SAP rollouts - or "doing SAP correctly" as one CIO put it - and virtualisation.

Neil Hammond, head of IT for British Sugar, said: "Increasingly the business is becoming more mobile, with more international travel. The challenge is to provide technology to help a mobile workforce. Collaboration software therefore will become more important - both the connectivity and the ability to work as ad hoc teams and special interest groups."

One new issue high among CIO priorities this year is green IT and the need to reduce the power consumption and carbon footprint of IT operations, while web 2.0, software as a service and service-oriented architecture also make it onto the list.

This contrasts with last year where modernising infrastructure and legacy transformation were key spending priorities.

The CIO Agenda 2008 survey includes responses from 20 CIOs and IT directors on silicon.com's CIO Jury IT user panel.