CIOs See Growth in IT Budgets and Staff for 2012

Tuesday, March 27, 2012

Bill Gerneglia

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The Hackeet Group's IT Key Issues study finds return to moderate growth in budgets and staff for 2012, with some caveats. The study entitled "2012 IT Key Issues: Coming to Terms with the 'New Normal'", finds that companies may see some breathing room in IT budgets and staffing in 2012.

After several years of stagnant or negative growth, most companies are now projecting a 3-4 percent increase in IT budgets and staffing for this year, which can be seen as acknowledgement that IT is critical if companies are to execute on their aggressive growth plans.

However these planned increases could disappear quickly if revenue growth expectations fall short.  The Hackett Group recommends that CIOs develop contingency plans for cutbacks should they be required.

CIOs can expect to see a return to moderate growth in IT budgets and staff for 2012, according to a new IT key issues study from The Hackett Group.  The study also offers significant caveats, given the dramatically increased business volatility that shows no signs of changing.

This will still be a trying year for IT.  For 2012, CIOs are acknowledging that the "New Normal" has been largely accepted as the status quo, or the "Now Normal."  For most companies, this means that 2012 will require them to carefully balance the search for new revenue with a focus on emerging markets while they preserve margins amid continued high volatility.

Many companies are expecting as much as 25 percent volatility in key areas such as input prices, customer demand, and available talent. This has the potential to drive extreme swings in business projections, which IT must be able to accommodate.

IT leaders are positioning their organizations in 2012 to enable their business partners to increase revenues  in emerging markets and improve margins in established markets. Success is heavily predicated on IT delivering the right business services at a global scale and providing the right information for rapid decision making.

IT organizations are driving a more traditionalist agenda -- focusing on improving alignment with the business and reducing technology complexity -- while slowing the adoption of emergent topics such as cloud computing as they respond to the pressing needs of globalization and enterprise information requirements.

The Hackett Group's research recommended that companies be prepared to adapt their business models and priorities in response to economic changes in regional global markets.  This will require companies to fully understand the benefit that comes from adopting global standards and organizational models that allow optimal execution by leveraging both skill and scale more broadly. 

In addition, the increased volatility  in demand across global regions has made it more critical than ever for companies to truly understand how each region should operate while still gaining the advantages that comes from a global process operating platform.

At all levels in the process hierarchy, IT is planning to enable  global process ownership, in some cases more than quadrupling current levels. But, while there are very compelling business drivers for IT globalization, the amount of IT transformation activity required is extensive.

Although companies have reported aggressive goals in the past, they have so far been unable to follow through on their plans.  Success is heavily predicated on IT delivering the right business services at a global scale and providing the right information for enterprise decision making.

The study also suggests that in the face of higher volatility in global markets, understanding regional differences on a global basis is Key.

Cross-posted from CIO Zone

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