IT budgets, staff survive economic crisis with ANZ CIOs

Peter Dinham
Thursday, 05 November 2009 10:47

IT Industry - Market

The majority of Australian companies have faced the downturn in the economy without cutting IT budgets or IT staff, instead achieving most of their much-needed cost savings in key organisational areas such as administration and operations.

According to the survey by IDC – the biggest annual survey of ANZ CIOs – of the company CIOs interviewed, three out of four of them said they had faced the economic crisis without cutting IT budgets or staff.  While only 11 percent said they had cut ICT budgets and staff, a much larger number – 45 percent – had slashed budgets and staff from administrative and operational areas.

IDC's survey also showed that IT spending growth remained at steady levels, even though CIOs throughout last year “already faced a difficult situation dealing with an onslaught of disruptive technologies transforming IT such as SOA, SaaS, convergence and others.”

However, Melissa Martin, senior market analyst at IDC, said today that in 2009 this transformation was “taking place in an economic pressure cooker,” adding that “while we used to talk about using IT as a tool for business transformation, it was generally considered voluntary. However, as IDC's 2009 results reveal, thanks to the global economic crisis, there is business transformation whether CIOs like it or not."

Adam Lee, co-author of the report and associate market analyst, at IDC said that operation budgets of ANZ CIOs are experiencing a shift, and he said that ”some confirmations, hardware and software refreshes, are stretched, and a close watch placed on maintenance fees as they become significantly lower.” Lee also said that some contrasts such as outsourcing is falling slightly and that “network spend is up and planning for internal and external staffing increased for ANZ organisations.”

"Moving forward, this disruption and change equals opportunity for the CIO - an opportunity to review IT systems; staff setup and knowledge; products and services offered; to look at vertical market opportunities and to capitalise on competitive strengths," Martin concluded.
 
Other key factors revealed in the IDC survey include:

•    The top three CIO priorities in 2009 are: reducing costs (27.6%), recruiting and retaining staff (10.3%) and meeting users' expectations (10.2%).

•    The importance of IT persisted even during the economic crisis: 58.2% of survey respondents in 2009 believed that IT contributed to the operational capacity of their business. A further 33.8% viewed IT as a source of competitive advantage.

•    The top three areas of IT Investment over next 12 months will be: systems infrastructure (security, storage, network, middleware etc) - 18.6%, back office: eg: Enterprise Resource Management (ERP) - 16.1% and front office: eg: Customer Relationship Management (CRM) - 14.7%.

•    CIO reporting lines are changing: Due to the greater focus on reducing costs and doing more with less, CIOs are now reporting to CEOs (50.1%) COOs (17.5%) and (CFOs 14.7%).  This contrasts greatly to last year's results where 78% were reporting to CEOs and only 5% to CFOs - providing yet another way to show how companies are responding to the current economic crisis and the increasing importance of controlling and monitoring operations and costs.