CIOs getting better prices, see flat second half spending

A Citi Investment Research survey of 200 CIOs finds a cautious outlook for technology spending that's roughly flat in the second half compared to a year ago. Under the surface, however, there are some interesting crosscurrents and IT buyers are getting better pricing.

The survey released last week found the following:

• CIOs--100 in Europe and 100 in the U.S.--see flat IT spending in the second half compared to a year ago.
• New projects are being put off in the second half. CIOs said they expect to spend 19 percent of their technology budgets on new projects, down from 23 percent in the second half a year ago.
• CIOs are getting better deals from IT vendors across the board. You name the category and the pricing environment is more favorable. That fact doesn't add up well for the profit margins of all of those technology companies about to report earnings over the next three weeks (click to enlarge chart).

• Among the CIO priorities, security and server consolidation are top priorities, but outsourcing, offshoring and business process outsourcing projects are being deferred. Reading between the lines it appears that in a shrinking budgets outsourcing projects look like bigger time and budget sinks. Of course, a weak dollar, which minimizes the currency and labor arbitrage impact, makes outsourcing less appealing (click to enlarge chart).

• CIOs in Europe are more bearish about the global economy. Half of European respondents expect the economy to weaken over the next 12 months. Among U.S. CIOs, 47 percent expect the economy to be about the same a year from now; 43 percent expects conditions to get worse and 7 percent see things improving.