When it comes to IT budgets, bigger isn't always better

How much CIOs get to spend is influenced by a huge range of factors, many of which they can't control.
Written by Steve Ranger, Global News Director
CIO Michael Spears: ": "More spending or a bigger IT budget isn't necessarily a win for IT."
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IT budgets aren't set in isolation: whether they will go up -- or down -- will depend on a whole set of factors outside of the immediate control of the CIO.

Investment plans will vary by industry, by country, and may even depend on which currency the CIO uses to pay the bills. Even some harder-to-quantify factors like the attitude of senior management towards technology (and the bargaining skills of the CIO) will have an impact on how much is set aside for tech spending.

The state of the individual IT department itself will be a significant factor: one involved in a major IT overhaul will have a very different investment profile to one which is squeezing every possible iota of value out of its existing infrastructure.

All of this means that while big surveys of CIOs can give one perspective on IT spending (currently the feeling is that it will remain generally flat), talking to individual CIOs will give a different view. When asked recently, 'Do you think 2016 will be a better year for IT budgets and investment than 2015?' the responses from members of the TechRepublic/ZDNet CIO Jury reflected just how complicated the budget setting factors in place really are.

Florentin Albu, CIO at Rothamsted Research, said investment will vary by sector: "I believe that certain government-related sectors will have to adjust to budget reductions, and implicitly investment in IT in these areas will not be on the up. At the same time, I believe that the commercial sector shows an increased appetite for investing in IT solutions, and this will be reflected in more generous budgets in 2016."

Another complication: deciding what is, and what isn't, part of the IT budget is getting harder, he said.

"IT is used very loosely now, to cover everything from data and information management, to infrastructure, to enterprise systems etcetera, so the line between business budgets and IT budgets will become increasingly blurry," he noted.

Other CIOs are dealing with factors very specific to their particular industry.

"In the oil and gas sector we will continue to see significant overhead cost reduction targets through 2016," said Derrick Wood, Group CIO at Wood Group.

"For IT&S this will mean both a review and rationalisation of our own cost base, identifying areas which can be commoditised and aggressively managing down cost; and investing in innovation to enable further efficiencies across the business. Overall, this will probably mean a slight fall in IT spend, but with more emphasis on the spend profile and where limited investment is directed."

Matt Mielke, director of IT at Innovations Federal Credit Union, said that while for the last few years he's kept the belt tight on the technology budget, "some of those essential upgrades can no longer be put off another year and will occur in 2016. I see the technology budget growing slightly next year out of necessity."

In contrast John Gracyalny, VP of IT at SafeAmerica Credit Union, said he has funding for additional staffing and security initiatives but added: "Overall funding will be down, but that is an artifact of having replaced our core processing system in March, which was the single biggest IT project here in over 12 years."

Michael Spears, CIO at NCCI Holdings, said that it's not just about whether budgets are going up or down: "More spending or a bigger IT budget isn't necessarily a win for IT. It's all about where that spending is going."

And whether there is more cash for IT or not, belt tightening remains a must, he argues: "If you stop looking for creative ways to minimize infrastructure and other 'run the business' expenses, the budget can get away from you. If budgets go up for innovation, that's a win for IT and the company. Even in that scenario, belt tightening can make room for new infrastructure, like security initiatives, without cutting into capacity for innovation."

Robert Cireddu, director of technology at Riverside Local School District, had another perspective: while budgets might rise this doesn't mean CIOs will be necessarily spending it on innovation. "I think budgets while expanding slightly, they are more conservative and those new and existing dollars will be spent on tried and true technologies, those with a proven track record."

More from the CIO Jury

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