CIOs See Spending Uptick, But Remain Cautious, Conservative

Chief information officers (CIOs) at enterprises worldwide remain cautious about boosting their technology spending, and the money they do spend will concentrate on security and business intelligence, said a survey released Tuesday.

According to Gartner Executive Programs (EXP), a unit of the Gartner research company, the most recent annual poll of CIOs points to signs of a global recovery.

In the survey of more than 950 CIOs from organizations in North America, Latin America, Europe, Asia/Pacific, the Middle East, India, and South Africa, Gartner EXP found that the corporate heads of IT anticipate a technology spending increase of just 1.4 percent during 2004. About 40 percent believe that this increase won't happen until the second half of the year.

"Even though the global economy is on the up-turn, CIOs still show a lot of caution," said Marcus Blosch, a vice president and research director for Gartner EXP. "They're being very conservative, laying down the foundations of growth, but not aggressively pushing for it.

"Call it a shifting of gears," he added, "from a dampened mode to a growth mode."Global IT spending won't substantially increase, he added, until CIOs are confident that the recovery is real, and sustainable.

"It's going to take time for them to shift gears and forget their recent obsessions about cost," Blosch said. "Even then, they'll remain much more cautious about where they spend their money."

Among the priorities that the CIOs outlined to Gartner EXP, the top one in 2004 will be security, which held the number two spot last year. Data privacy issues, which took the number ten spot in 2003, leap-frogged all the way to number three on the CIO wish list for this year.

Blosch ascribed the turns in priorities to the continuing wave of security breaches, but also to more attention to local and global regulations and enterprise governance standards, such as the privacy laws in the European Union and the Sarbanes-Oxley Act in the United States.

"Anything to do with security, data security management, and data privacy and protection will get emphasized by CIOs this year," said Blosch.Another area Blosch pointed to is business intelligence (BI). With purse strings still tight, CIOs will fight to spend on BI, he said, because "they think that it will help them understand their markets and customers much better. It's a way for them to get the returns on investment that they still believe they desperately need."

Technology for its own sake, Blosch said, is dead on arrival with today's CIOs. They're far more interested in what the technology can do to advance a business process than the technology itself. "When we asked them if they believed there would be a 'next big thing' in technology," said Blosch, "more than a third of them said 'no.'"

And the hot-button issue of outsourcing -- hot at least with voters and lawmakers in the U.S. -- will only get hotter, as CIOs continue to press for lower costs, which leads them to shift services overseas.

"Outsourcing is set to continue, and grow quite significantly," Blosch concluded from the survey. "But while it's a key initiative in many companies, business process outsourcing remains a bit of a blind spot for many CIOs." Two-thirds of the CIOs polled by Gartner EXP, for instance, didn't see the issue as important now, or even through 2007.

"The truth about outsourcing is that CIOs are still learning how to make it work," he said.But the bottom line on global IT spending, at least as perceived by CIOs, is that the good times may, or may not, be back.

"Frankly, there's not going to be tons of money washing around in 2004," said Blosch, "and vendors will need to react to that with the way that they price their IT goods."