IT budgets to grow at 5.52 per cent in '09 despite slowdown: Gartner

Mumbai: As enterprises around the world face global economic conditions that have not existed for a very long time, IT spending budgets in India, in contrast to many other regions of the world, will still grow at 5.52 per cent in 2009, according to results from the 2009 CIO Agenda survey conducted by Gartner, inc. However, this is a sharp fall from the 13 percent IT budget increase reported in 2008.

The worldwide survey of 1,527 CIOs was conducted by Gartner Executive Programs (EXP) from September 15 to December 15 2008 and represents CIO budget plans reported at that time. Flat IT budgets were found across enterprises in North America and Europe, with slight increases in Latin America and a slight decrease in Asia/Pacific.

The Gartner EXP CIO report "Meeting the Challenge: The 2009 CIO Agenda" represents the most comprehensive examination of business priorities and CIO strategies. The CIOs surveyed represent more than $138 billion in corporate and public-sector IT spending, encompassing 1,527 enterprises across 48 countries and 30 industries.

''Indian companies will have to rapidly adapt in order to maintain their value proposition in the current volatile global economy,'' said Mr. Peter Sondergaard, global head of research at Gartner. ''CIO's in India need to recognize that IT's contribution to their enterprise extends beyond just cutting costs. They must have confidence in their ability to use IT to significantly increase business performance."

The top 10 business and technology priorities for CIOs in India and around the world in table 1 reflect the current challenging economic environment.

Top 10 Business and Technology Priorities in 2009

Source: Gartner EXP (January 2009)

''In the current economy, enterprise cost optimisation has become the most critical factor for the CIO'', said Partha Iyengar, head of research in India at Gartner. ''Despite worldwide IT budgets remaining flat in 2009, the Indian IT budget is still expected to grow at a modest 5.52 per cent. The majority of this budget - up to 60 per cent - will be used to run day to day operations of the business, while 23 per cent will be utilised to grow the business and 19 per cent will be used to transform the business''.

Indian CIO technology priorities on value realisation
The survey shows that CIOs in India have shifted their focus from investing in emerging technologies to increasing the return on their existing investments and infrastructure. CIO's need to extract more value from what they currently possess, rather than invest in new solutions. This explains the apparent stability in CIO technology priorities shown in the Table.

The survey shows that CIOs in India expect to:

• Invest in business intelligence applications and information consolidation in order to raise enterprise visibility and transparency, particularly around sales and operational performance. These investments are expected to pay extra dividends by responding to new regulatory and financial reporting requirements
• Invest in ERP technologies, a focus that reflects ERP's core position in enterprise operations. CIOs also plan simplification measures in 2009 that reduce the number of ERP instances, vendors and software licenses
• Invest in server and storage technologies to meet enterprise wide demand for these services

According to Iyengar, meeting the challenges of 2009 requires Indian CIOs to lead their enterprises through decisions that have no simple answers. CIOs need to have the foresight to look at IT in new ways. They will need to demonstrate this leadership through four imperatives:

• Be decisive in setting priorities on actions that raise enterprise effectiveness, with a focus on improving business process, using business intelligence to raise visibility, and enhancing workforce effectiveness.
• Do the "first things faster," as changing economic conditions render large projects irrelevant. CIOs need to apply a prioritization process to their schedule and recognize that other important priorities can wait. They need to place greater emphasis on the schedule (when) rather than the priorities (why)
• Be resourceful in restructuring IT to raise its productivity and agility, because the business will not reduce its demand for IT just because CIOs have fewer resources
• Modernize the technical infrastructure, as new technologies offer lower cost, use less energy, deliver better performance and provide greater capacity; the business will need all of these in the immediate future

"These imperatives form the basis for the CIO agenda and its focus on making the enterprise more effective," Mr. Iyengar said. "Every CIO in India will start at a different place, facing unique challenges and setting his or her own agenda to marshal the resources needed to make the right decisions and deliver results across the enterprise in what will be a challenging year ahead."