Last year saw a rare dip in IT budgets, as the U.S. and Europe stayed mired in the worst financial crisis since the 1930s. This coming year will see a partial return to normal, with
Life in IT is returning to normal for 42% of IT departments, with 43% recovering slowly from the recession and 15% still stuck in it. That return to normal is reflected in a budget growth of more than 5% in 46% of IT shops.
The IT picture around the world is changing rapidly, however. In India, investment in IT, for example, will grow 5% next year, compared to North America's 1.4% and Europe's 1.6%. Nonetheless, even in North America, 32% of IT shops will grow more than 5%.
With IT budgets back on track, IT managers cite the same items that have beenat the top of their priorities list since just before the 2007 crash. Asked to indicate their activity around 57 technologies, IT managers picked these as the Top 10:
- Server virtualization 56%
- Migrate to Windows 7 55%
- Network-based security 51%
- Data protection 46%
- Disaster recovery/business continuity 45%
- Custom application development 41%
- Business intelligence/analytics/data warehousing 41%
- Wireless networks 41%
- Data center consolidation 37%
- Backup for virtual servers 34%
From a project perspective it might appear that IT budgets are going to focus on infrastructure, but the survey reveals the reverse: 60% of IT departments are spending more on software, versus 53% spending more on hardware. Staffing is the big loser, with 30% citing increases there. The broad investment in software could well signal a shift from the last decade, when infrastructure -- storage area networks, virtual server farms and widespread broadband networking -- was an area of heavy investment, particularly in larger companies.
"These results were a little surprising to me in that they seem to focus on infrastructure-related technologies and issues. From my perspective as a CIO, I am more focused on where I am taking the organization and its business from a more strategic level," said Ed Bell, CIO for the commonwealth of Massachusetts' Legislative Information Services.
Business intelligence a big push in 2011
Bell's colleagues at larger firms support his view. In companies with more than $1 billion in revenue, the drive for software to improve business planning is strong, and 51% cited business intelligence, analytics and data warehousing as a 2011 initiative. For 51% of these large companies, data center consolidation is on the agenda as well.
Jon Nam, director of technology for Macy's Merchandising Group Inc., a subsidiary of the retail giant, sees business planning systems growing in importance.
"Planning has become an important part of our business model over the past year, and so the people associated with the business strategy here are using more business intelligence," Nam said. "Being in retail, we are concerned with things like material shortages and various overseas outsourcing issues, and of course the global economic conditions. So, we are looking for ways to not be blind-sided by these global issues."
Following the pattern of the past several years, North American shops remain active in disaster recovery (49%). That focus fits with what Shelly Barnes has on tap for 2011.
"We are right in the middle of insourcing some major pieces," said Barnes, senior director of Greenwood Village, Colo.-based Newmont Mining Corp.'s project management office and infrastructure and IT services. "We just moved one of our data centers in October, and we are moving a second one in February. So, to accommodate that, we will build out some of our [disaster recovery] capabilities next year. We will also optimize are our network [to better accommodate the insourcing strategy]."
Also popular in North America is upgrading to Windows 7, which made it to No. 1 at 59%, compared to its No. 2 status worldwide.
IT budgets: New priorities
The re-emergence of a focus on applications is also reflected in a shift in general priorities: Worldwide, 37% of respondents cited "expand IT to support business growth" as the primary focus for their department next year. That's up from 21% last year, when "selective spending in a few key areas" and "maintaining service levels with flat budgets" topped the agenda (at 28% and 23% respectively).
In North America, however, the picture again is slightly less rosy. There, expansion is still the top choice, but for just 26% of IT shops. Selective spending and maintaining service levels are close behind, at 25% and 23% respectively. Statistically, that's essentially a three-way tie.
Kendyl Peebles, IT director at Clancy & Theys Construction Co. in Raleigh, N.C., expresses the view of North American IT managers, whose industries are still trying to shed the recession. His emphasis in 2011 is to "hold the status quo, improving on what we already have. I will be just keeping some of the maintenance and licensing deals going I have in place. … For me to make any new investments in 2011 will take someone pretty high up screaming loudly."
Supporting business growth also was the driver for IT departments at 37% of companies worldwide with more than $1 billion in annual revenue. Estimated budget growth was fairly uniform across companies regardless of their size: 2% at small companies (less than $100 million in annual revenue), 2.8% for midmarket companies ($100 million to $1 billion) and 2.2% for large companies (more than $1 billion).
Server virtualization tops for 2011 worldwide
As far as new technologies go, virtualization clearly has moved into the mainstream. On the server side, server virtualization was the most popular project. Fifty-six percent of companies are going to invest in it this year, and 34% are being spurred to invest also in specific products and technologies for virtual machine backup. Storage virtualization finally is showing some traction: 34% of IT shops are spending on it in 2011 (40% of IT shops in large companies). Desktop, application and network virtualization are somewhat behind, but 27% to 29% of respondents still are investing in them.
From my perspective as a CIO, I am more focused on where I am taking the organization and its business from a more strategic level.
Ed Bell, CIO, commonwealth of Massachusetts' Legislative Information Services
Not totally mainstream, but definitely moving up the charts, is cloud computing. Managers at 33% of IT shops say they will have some kind of cloud project in 2011, and managers at 22% of IT shops will have some kind of cloud storage initiative. More robust cloud infrastructures, such as private clouds or private clouds integrated with public clouds, are still relatively rare, however. In 2011, just 16% of IT managers will launch private clouds and 13% will launch private-public clouds. Large companies are somewhat ahead in all phases of cloud technology, with 41% citing some activity.
Private cloud activity is the way many corporations are going, Macy's Nam said: "I am in a lot of different focus groups -- I just went to one last week where we talked about the cloud. A lot more companies are talking about going to the cloud. Not so much public clouds, because many still do not trust public clouds."
Another heavily hyped area this year is mobile technology. The adoption of mobile is similar to that of cloud technology: real but not up to the level of the hype. Tablet PCs are on the menu at 21% of companies next year, however. That seems like a healthy boost for a product category that's been very niche since its start in the mid-1990s. Enhancing corporate apps for mobile devices may be the most telling statistic: 20% of companies worldwide (28% of large companies) are doing this.
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