The number of CIOs planning budget decreases continues to rise dramatically, according to 208 IT executives surveyed in January, 2009. More than half of IT heads (53 per cent) now plan to slash budgets in response to unfavorable economic conditions, up from 40 percent in a similar survey conducted in October and 17 per cent in the first quarter of 2008.

Fifty-nine per cent of CIOs are implementing IT hiring freezes, up from 46 per cent in October and more than one third (34 per cent) have begun reducing IT headcount, up from 23 per cent 3 months ago.

More CIOs plan cuts to IT compensation costs; 35 per cent of CIOs plan a decrease in the coming year, up sharply from the 18 per cent reported in October.

Nearly a third of CIOs (31 per cent) say they plan to reduce their full-time, in-house staff; an increase from 21 per cent in October and 14 per cent in the first quarter of 2008 while close to half (48 per cent) plan to reduce spending for contractors and temporary workers, up from 26 per cent 3 months ago

IT projects on hold – cost cutting measures continue

More than two-thirds of CIOs (68 per cent) say current economic conditions are causing purchasing decisions to undergo closer scrutiny by other business executives in their company.

With IT increasingly under the microscope, cost cutting is a priority for many CIOs. Almost half report that the percentage of their total IT budget allocated to new projects will decrease and 49 per cent have already begun freezing or canceling IT capital spending.

CIOs most frequently cite travel restrictions, hiring freezes and holding off on discretionary IT projects as cost cutting measures they have already begun implementing.

The percentage of CIOs slashing their training budgets increased sharply to 46 per cent, from 25 per cent 3 months ago. With cost cutting top of mind, some CIOs are looking for alternative IT models; 38 per cent of CIOs say they are more likely to consider on-demand services and SaaS as a result of the unfavorable economic condition.

Which of the following measures are you considering taking as a result of current economic condition?

Postpone discretionary IT projects: 58% started in the last 6 months, 19% plan to start in the next 6 months, 23% no plans at this time

Renegotiate IT vendor contract: 52% started in the last 6 months, 22% plan to start in the next 6 months, 26% no plans at this time

Freeze IT hiring: 59% started in the last 6 months, 10% plan to start in the next 6 months, 31% no plans at this time

Freeze or cancel IT capital spending: 49% started in the last 6 months, 11% plan to start in the next 6 months, 41% no plans at this time

Reduce IT headcount: 34% started in the last 6 months, 6% plan to start in the next 6 months, 60% no plans at this time

Reduce spending on IT contractors and consultants: 52% started in the last 6 months, 17% plan to start in the next 6 months, 30% no plans at this time

Reduce spending on training for IT staff: 46% started in the last 6 months, 11% plan to start in the next 6 months, 43% no plans at this time

Restrict IT travel: 61% started in the last 6 months, 12% plan to start in the next 6 months, 27% no plans at this time

How will your budget within the following categories change in the next 12 months?

Hardware: 20% increase, 47% decrease, 33% remain the same

Applications: 23% increase, 41% decrease, 36% remain the same

Network infrastructure: 26% increase, 35% decrease, 40% remain the same

Web/mobile: 22% increase, 32% decrease, 46% remain the same

Outsourced IT service: 20% increase, 48% decrease, 32% remain the same

IT compensation costs (include salaries, bonuses & benefits but not stock incentives): 26% increase, 35% decrease, 39% remain the same

Methodology

The CIO IT Budget & Staffing survey was conducted online between January 12 and January 26, 2009 with the objective of gauging how current economic conditions are impacting IT spending plans. An email invitation containing a link to the survey was sent to a sample from the CIO customer database. Results are based on 208 respondents who indicated they are the top IT executive at their company or business unit. A broad range of industries are represented including government and nonprofits (21 per cent), financial services (15 per cent), manufacturing (15 per cent), services (14 per cent), high tech, telecom and utilities (12 per cent), retail, wholesale and distribution (11 per cent) and healthcare (7 per cent). Company size distribution by annual revenue is as follows: <$100 million: 35 per cent, $100 million – $999.9 million: 37 per cent, $1 billion or more: 18 per cent, non-profit: 9 per cent (2 per cent of respondents were unsure). The margin of error on a sample size of 208 is +/- 6.8 per cent. Per cents on questions where respondents could select only one answer may not sum to 100 due to rounding. Not every respondent answered every question.



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