IT budgets, headcount set to grow in 2014: study

Companies are increasing IT spending, yet economic uncertainty remains a concern, SIM reports.

By Ann Bednarz, Network World
November 12, 2013 08:13 AM ET

A majority of IT leaders are reporting modest growth in budgets, salaries and headcount, according to the latest survey data from the Society for Information Management (SIM).

Companies are still concerned about the economy, but that hasn’t stopped them from funneling more of their revenue to the IT department this year than they did in recent years, SIM reports. In 2013, the average IT budget was 4.95% of corporate revenue. That’s only a marginal increase from 4.94% in 2012, but it’s a full percentage point higher than the average rate of 3.96% measured over the past nine years.
SIM, which counts 4,500 CIOs and IT executives among its ranks, is hosting its SIMposium conference in Boston this week. The organization’s annual IT survey includes these highlights:

Most IT leaders expect budget increases. Looking ahead to 2014, 65% of survey respondents say IT budgets will increase, 23% expect to see a decline, and 12% are forecasting no change. The average increase is projected to be 1.48%.

Headcount increases outnumber reductions. Nearly half of companies (47%) reported an increase in internal IT employees in 2013, while 23% said staff numbers declined. The average increase was 1.10% in 2013. Next year, 55% of respondents anticipate growing headcount; 18% expect reductions.

Raises are the norm. A decisive 89% of respondents said average IT salaries climbed in 2013, while only 4% reported decreases. The average pay increase was 2.24% in 2013. Next year, 90% expect to boost salaries by an average of 2.45%; 4% expect reductions in pay.

Staff turnover is accelerating. After stalling for a few years, staff turnover increased among IT pros this year. The rate of turnover hit 6.58%, up from 5.23% in 2012, 5.51% in 2011, and 5.5% in 2010.

Training budgets are rebounding. In 2013, companies allocated 4.68% of their IT budgets for education and training -- a sizable increase from 2012, when 2.87% of budgets went to training.

Most IT monies are spent internally, domestically. IT leaders allocated 73.2% of their 2013 budgets to in-house, domestic spending. Another 22.9% was outsourced (17.2% outsourced to domestic providers, 5.7% outsourced offshore). The remaining 3.9% was allocated to in-house offshore spending.

On-time delivery matters. IT leaders ranked the most-used metrics for measuring IT success, and on-time project delivery placed first, followed by: projects delivered on budget; increased customer or client satisfaction; SLA targets; and productivity improvements.

Analytics rule... Survey respondents were asked to rank their largest or most significant IT investments in 2013, and analytics/business intelligence was the clear standout, cited by 42% of respondents. Other popular priorities include: CRM (19.5%), cloud computing (18.6%), and ERP (16.6%).

… yet analytics are worrisome. IT pros were also asked about their greatest concerns, and analytics/business intelligence topped the list of worries. Security ranked second among IT concerns, followed by disaster recovery, cloud computing, and BYOD.

The forecast is cloudy. SIM’s survey found that 81% of organizations use the cloud. On average, 26.5% of all IT services are cloud‐based. Among those, 54% are provided by a public or external cloud, and 46% are provided by a private or internal cloud.

Business alignment remains an imperative. When asked about the most important IT management concerns for the organization, the most pressing issue cited is a familiar one: alignment of IT with the business. IT pros also said the organization is concerned about business agility, business productivity, business cost reduction/controls, and IT cost reduction/controls.

Similarly, when IT pros were asked about their own IT management concerns, IT/business alignment also ranked first. But priorities shifted after that. The next most worrisome issues for IT pros are security, followed by talent shortages and business continuity/disaster recovery.

Economic uncertainty is still taking a toll. While the majority of respondents reported positive gains in IT spending and personnel, not everyone did. To recap, 27% of respondents cut IT budgets this year, 23% trimmed IT headcount, and 4% saw reductions in average salaries.

Ann Bednarz covers IT careers, outsourcing and Internet culture for Network World. Follow Ann on Twitter at @annbednarz and reach her via email at abednarz@nww.com.