IT must prove its worth as economies head south

IT budgets in the UK are projected to grow at about 2.5% this year, compared with 3% growth globally

CIOs and IT directors will have to fight to prove that IT is part of the solution, not part of the problem, as organisations tighten their belts in the face of economic uncertainty, according to Gartner.

The warning was made by Dave Aron, research director of Gartner's Executive Programmes, as the analyst firm announced the findings of a global survey of 1,500 CIOs.

"CIOs have to take the high ground and understand the drivers of their business," Aron says.

The report — "Making the difference: The 2008 CIO agenda" — highlighted the top 10 business and technology priorities facing the leaders of IT organisations. It found that organisations are increasingly looking to IT to make a fundamental difference in supporting growth.

Improving business processes remains the top management priority, while attracting and retaining customers has moved up from number three in 2006 and 2007 to number two this year. Innovation for the business — the creation of new products and services — has leapt into the top three this year, after barely making it into the top 10 last year.

Reducing enterprise costs has slipped from number two in the last two years to number five in 2008, according to Gartner. However, Aron warns that in the face of economic uncertainty IT leaders should be prepared to fight at every level to maintain and even expand spending on IT.

IT budgets are typically 3% to 5% of the overall business budget costs, says Aron. A 10% IT budget cut would make little difference in overall business costs, but it could severely damage an organisation's ability to innovate.

"If businesses invest in IT they are more likely to get a strong return on their spending," he says. "The fat went in the last recession (of 2001)," he adds.

IT budgets in the U.K. are projected to grow at about 2.5% this year, compared with 3% growth globally. Spending in larger companies is likely to grow more slowly than this overall figure, he adds.

In addition to the business and technology priorities facing CIOs in 2008, the Gartner research highlighted staffing challenges.

"Only 27% of CIOs believe that they have the right number of skilled people to meet business needs. That is impacting both IT performance and IT's support for enterprise strategies," says Gartner.

"The skills of your people count," says Mark McDonald, had of research for Gartner Executive Programmes. "Two-thirds of IT organisations that do not meet business expectations claim that skills are at the core of their performance issue."

But the issue is not expected to be resolved quickly, since only half of CIOs reporting a skills issue have building IT skills as a top-five strategy for 2008, Gartner adds.

Top 10 business priorities

1. Business process improvement

2. Attracting and retaining new customers

3. Creating new products and services (innovation)

4. Expanding into new markets or geographies

5. Reducing enterprise costs

6. Improving enterprise workforce effectiveness

7. Expanding current customer relationships

8. Increasing the use of information and analytics

9. Targeting customers and markets more effectively

10. Acquiring new companies and capabilities (mergers and acquisitions)

Top 10 technology priorities

1. Business intelligence applications

2. Enterprise applications (ERP, CRM and others)

3. Servers and storage technologies

4. Legacy modernization, upgrade or enhancement

5. Technical infrastructure

6. Security technologies

7. Networking, voice and data

8. Collaboration technologies

9. Document management

10. Service-oriented architecture (SOA) and service-oriented business applications (SOBA)

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