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Between the Lines

Larry Dignan, Andrew Nusca and Rachel King

Stinks to be the CIO: The 2010 IT budget may spike to 2006 resource levels

By | October 19, 2009, 8:00am PDT

Welcome to 2010 with the same resources you had back in 2006 and 2007 (if you’re lucky). Now go out and be useful to the business.

That cheery outlook was delivered by Gartner in its 2010 CIO Agenda talk. Some pep talk, guys. Gartner analyst Mark McDonald opened the talk with some entertaining riffs, but the overall message was clear: Budgets aren’t coming back quickly and CIOs need to evolve or they are screwed.

McDonald took an applause poll of CIOs who are seeing a budget increase of 15 percent, which would only get you back to par from a few years ago, and about three people clapped (in a room with probably 400 IT execs). These three people are likely to be attacked by vendors later today.

The reality: In 2009, 88 percent of enterprises cut their IT budgets. The good news:  Even with strong increases in 2010, CIOs will face the future with essentially the same resource levels they had in 2006 or 2007.

Put it into a graph, the IT budget picture goes like this (Gartner updated these figures to a decline of 6.9 percent in 2010 on Monday):

But we knew the budgets stunk. What’s different for the 2010 CIO is that she is being pulled in two directions—cut costs and drive revenue. McDonald argued that IT isn’t just about cutting costs—if it were CIOs would be cheered right now. “If you save money and it does not drive more investment in IT you know there isn’t infinite demand,” said McDonald. “We fight commoditization.”

McDonald also noted that the business has more choices for technology than ever. In other words, the internal IT department may not be the best choice anymore for business.

However, it’s not terribly clear what’s going to change. Haven’t CIOs been evolving forever? Haven’t we been talking about business alignment for the last two decades?  CIOs still have largely the same priorities they’ve had for the last three years: Improving business processes, cutting costs, improving efficiency and retaining and attracting customers and innovating.

Gartner’s Ken McGee and Dale Kutnick call the new normal the era of zero percent IT growth. Simply put, 2010 priorities look a lot like the previous three years—without the budget. And oh yeah I almost forgot: 2010 will make or break CIO careers. No pressure there.

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Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

Disclosure

Larry Dignan

Larry Dignan has nothing to disclose. He doesn’t hold investments in the technology companies he covers.

Biography

Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.

For daily updates, follow Larry on Twitter.

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RE: Stinks to be the CIO: The 2010 IT budget may spike to 2006 resource levels
dfwekrwe30-24353599317173296911749257103268 Updated - 5th Nov
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0 Votes
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wow
Christian_<>< 19th Oct 2009
One would think with our new leader money would
be flowing with millions of new jobs all over
the place.

Since millions have lost jobs since his automaker
take overs and giving banks Billions if not trillions
of dollars that went no where.

Now free healthcare for all, that is right free with
no cost to anyone.

No cost to anyone except the employer who will
get rid of more jobs, that will fix it the
profit from a business is evil now.
0 Votes
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Imagine the savings by dumping the IT Money Pit(tm) called Microsoft.

Microsoft, your money pit(tm)
0 Votes
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And replace it with what?
ShadowGIATL 19th Oct 2009
Another money pit?

The evil is in the executives, not the company itself. Name it Free and Fair Software, and put a money hungry exec in charge and it's the same game.

Now here is the trick; find an exec that ISN'T money hungry. It's ok, I'll wait...
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I have to agree
kmajors@... 20th Oct 2009
Microsoft may not be the best but it is the only universally accepted solution.

You can get "free" Linux desktops but who will support them and train the users to use them? I doubt that will be free.

Applications are "free" from Google and uothers but is that really an enterprise solution? Plus for bussiness the license is not always free. OpenOffice is a viable choice but most business users want MS Office. The reason businesses are willing to pay the price is because that is what the end user wants and is most productive with.

To save cost you must increase the productivity of the end user. It would be very ddifficult to replace Microsoft completely and your costs of support and end user pushback would increase dramatically.

CIOs need to find smarter ways to leverage the technology they already have and adopt new technology that enables the BUSINESS to be more efficient.
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Yea well...
ShadowGIATL 20th Oct 2009
I'm a fan of Linux, and it can be a cost saver if everything is aligned. But you're right, just because it is free doesn't mean it is without cost. Anyone that argues against that is living in a fanboy bubble.

There are fee software solutions, but for the same reason Windows remains popular, so does the standard business apps. It can cost money to move from one to another, and sometimes, there is lost time for converting and even worse lost data. Either way, time is money to company, and lost data can be catastrophic. It's usually easier to just continue as is.

It really does come down to end users. IT can only do so much. Once you give them the infrastructure and software, the ball is in the hands of the end user. But from experience, a lot of end users will do everything in their power to avoid work, and the most common excuse is to blame the computers. I had one claim that they couldn't use the computer because the IT guy (me) had done something to the computer.

This attitude is infectous, and it spreads the same way hate for law enforcement does in prison. There is no logical reason someone should hate a police officer for arresting you for doing something wrong, if it is your fault. (and it usually is) But they do anyway. They blame the officer for doing them wrong. Same goes for the way end users treat IT. They blame IT for everything that goes wrong, when in fact it is user error probably 90% of the time. I figure 5% computer, and 5% IT... because we are only human, it happens.

CEOs or whoever the head of the orginization happens to be need to let the CIO, or IT managers do their job. I have seen to many times IT being bypassed for technology decisions that ended up costing the org money. And sometimes, IT gets blamed for that, because they "couldn't make it work."

And most importantly, IT should never be considered under end users. I worked briefly at a place that thought IT should be at end users beck and call as though the end user knew what was best. IT should do their best to help end users, but they shouldn't be told what to do to fix a problem by an end user. That is a sure way to lose quality IT professionals, and lose money on things that aren't really needed just because the user wanted it.
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Replace it with reliable free software.
peter_erskine@... 9th Nov 2009
The concept of a computer that just works, or free software that does exactly what it says it will do, and just works, seems hard for some people to understand. However, these things are available now.
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As it should be...sort of.
edcoyle Updated - 19th Oct 2009
As technology advances and cost come down IT budgets should follow. Speeds have advanced to the point that its less painful to keep older hardware as new hardware cost decline. The law of diminishing returns + price declines. Because of this pain factor older hardware stays longer. I don't believe that budgets should be on a roller coaster but should factor a steady decline to some point of stasis. Upgrades should move to the front row when they incorporate saving through power consumption reductions, admin costs and such, and here again costs should decline. Perhaps cost increases should go to personnel that monitor commonly complex solutions and as we all have found the more eye balls on a project or problem the better. Better to see problems from many vantage points.
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But that is the problem isn't it?
ShadowGIATL 19th Oct 2009
Perhaps cost increases should go to personnel that monitor commonly complex solutions and as we all have found the more eye balls on a project or problem the better. Better to see problems from many vantage points.

Personnel is exactly what they are cutting. Forcing IT professionals to work with less help and lower pay appears to be the trend around my area.
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MIS is dying. CIOs and the IT industry as whole face a new era. One where the CIO and the IT department may be redefined, restructured, or even be completely cut out of the picture all together.

Many companies will have a CIO and may there may be some Project Managers in charge of various assets and aspects of the infrastructure of that company. But with all of it outsourced and contracted out to the "cloud", few if any other IT staff will really be needed.

Larger Corporations will face the staggering costs of "in-house" management of resources or the cost and long-term bets associated with contracting an I.T. firm to put all on the cloud. Example: A local large medical organization has outsourced all of "in-house" MIS department to a large well-known international corporation. With lay-offs ensuing.

Right now IBM, Google and Microsoft really seem to be the only ones able to handle large national and international cloud computing implementations. Oracle/Sun and Cisco others want to get into the game but they will need to re-focus and re-brand to do so.

Where does this leave the Microsoft Partner, who has been deploying Microsoft Solutions, but is now being left out of Microsoft's "Cloud Computing" vision?

Where will this leave Small to Medium sized firms that cannot possibly give away their services at a cut-rate price to similar sized clients, as large enterprises such as Google and Yahoo have done?

Where will this leave all the IT technicians and Network Engineers who will no longer be needed because fewer and fewer businesses need "in-house" IT staff?

The situation reminds of me of the Cannery Row in Monterey CA
where one can see an entire fishing industry that came to an end there.

Perhaps we will have such a monument built to commemorate the "MIS industry, that once bustled and led the business world to new heights and new places.

The questions is: Can the "IT worker" adapt, grow, and be relevant in a "post-M.I.S." world?
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RE: Stinks to be the CIO: The 2010 IT budget may spike to 2006 resource levels
dfwekrwe30-24353599317173296911749257103268 Updated - 5th Nov
We all fully love the very provide.Genuinely trying forward raiders jerseys to endure a result raider jerseys of oakland raiders jerseys much more.

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