Gartner CIO Survey: US IT Spending Soft In 2008

Gartner, the Stamford, Conn.-based consulting firm, said Thursday that CIOs in the U.S. expect their IT budgets to grow about 2.3 percent for 2008, less than the 3.1 percent growth Gartner had expected based on prior surveys.

Mark McDonald, group vice president and head of research for Gartner Executive Programs, said CIOs surveyed expect worldwide IT spending to increase 3.3 percent thanks to accelerated budget growth in Europe and Asia-Pacific, which made up for the anemic growth expected in the US. That number is stable with prior expectations, he said.

Gartner surveyed 1,011 CIOs from around the world between February 12 and March 12.

About 20 percent of CIOs reported IT budget declines for 2008, with the average of those declines being around 10 percent. "This indicates that CIOs and their companies are being cautious in their spending," McDonald said.

Worldwide, for every CIO who expected their company's IT budget to rise in 2008, another CIO expected their budget to fall, McDonald said. However, in the U.S., for every CIO expecting a budget increase, between two and three CIOs expect budgets to decrease, he said.

One in four U.S. CIOs said in the survey that their IT budgets were reduced in the first quarter, while one in 10 said they experienced an increase in their IT budgets, McDonald said.

Softness in U.S. IT budgets varies by market. McDonald said that, given the turmoil in U.S. financial markets, financial firms are expecting significant IT budget cuts, while other areas like healthcare and public sector spending is less affected.

One reason IT budgets are for the most part stable despite economic conditions is the way determining those budgets has changed, McDonald said. IT managers have been managing budgets more carefully. "In the past, if they didn't use up their budget, it was returned to the company coffers," he said. "In the last couple years, budgets have started smaller, and then grown as needed."

Only about one-third of the surveyed CIOs said they had contingency plans in case IT budgets change. About half of them had plans if budgets fell, and half had plans in case budgets rose. "This probably indicates some degree of confidence that 2008 budgets are still solid," he said.

Carl Wolfston, director of Headlands Associates, a Pleasanton, Calif.-based solution provider, said the survey results reinforce trends he is seeing with his company's customers. "That's easily the case," Wolfston said. "People are saying, we don't need that [project] right now, just use bandages to fix it."

The CIO of one of Headlands' long-term customers, for instance, said his company had cut almost all of its expenses this year. "He said his CEO has the mentality of, why buy all this fancy storage stuff when we can go to Fry's and buy another disk drive," Wolfston said. "This is a financial services company with 200 people. They just don't see past their desktops."

Solution providers have to find ways to help customers if they want to succeed where IT budgets are falling, Wolfston said. "We try to go in and show how we can save them money," he said. "If we can do that, then maybe they'll spend the money they save on something we offer."

Gartner next week plans to provide additional analysis of the IT market at its Gartner Symposium/ITxpo 2008 in Las Vegas.