Revealed: The CIO's biggest challenges this year

And which way is that budget going?

Published: 9 March 2009 14:52 GMT by Steve Ranger

Tags: cio

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Doing more with less and proving the IT department is vital to the business during the downturn are two of the many challenges that CIOs are facing in 2009, according to silicon.com's exclusive research.

Now in its fifth year, the silicon.com CIO Agenda surveys UK technology chiefs on a number of areas including their business and technology strategies.

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When asked to list the challenges and obstacles facing the CIO in 2009, the respondents revealed the tightrope that technology chiefs have to walk, simultaneously cutting costs while proving the value of the IT organisation.

According to one CIO, "demonstrating that we add business value" is the challenge of the year. For another, "maintaining the credibility of the IT department in the face of a business desire to cut costs" is the most important issue.

It's a subject that has been thrown into sharp relief by the worsening economic situation, with another IT boss saying cost-cutting is "inevitably" expected at the same time as the IT department is "maintaining the service levels required and retaining our best staff".

Another tech boss summed up the challenge as "rapid delivery without high investment to meet the needs of the business as it reacts to difficult market conditions".

For many CIOs, the recession is also impacting the IT department by altering the business' long-term view.

One IT head raised the challenge of "managing through a downturn with reduced budget but still preparing the business for the end of the downturn phase" while a fellow tech chief warned that the business is more risk-averse and wants to postpone initiatives until the economic climate becomes clearer, adding: "Expectations of service will not reduce, but support for investment, training, people development will."

According to the CIO Agenda 2009 survey, the size of the overall 2008 IT budget as a percentage of company revenue varied greatly across the 16 CIOs and IT directors who gave the information, going from one per cent up to a whopping 25 per cent, although in this case the IT chief acknowledged the budget was likely to fall this year.

Excluding this mega-budget, an average IT budget across the survey came in at around 4.4 per cent of company revenue. Most of the CIOs surveyed expected their budget to be flat or to decline slightly this year, with only two predicting their budgets will rise.

The proportion of the IT budget spent on new investment also varied considerably, from 10 per cent at the low end to 60 per cent at the high end, giving an average of 33 per cent across the CIOs who provided the data. All but one expected that spending on new IT investment to either stay the same or drop this year.

Perhaps unsurprisingly, with flat or declining budgets and less investment in new technology, nearly two-thirds of those surveyed admitted they were less optimistic than they were last year.

One positive note - for CIOs at least - was few IT chiefs are reporting a skills shortage, except for some gaps in database administrator roles, Itil expertise and security, although one IT chief warned that graduates are still too technically oriented and lacking in "soft" business skills.