IT Spending Improving Bit by Bit

For IT organizations, the year ahead will not only be a time for rebuilding but also for innovation. Spending will remain restrained, and IT executives will continue to be asked to deliver more with less. But they are also receiving the go-ahead to take risks with projects that promise long-term improvements in the ability of IT to support new business initiatives.

A new study by Computer Economics, Outlook for IT Spending and Staffing in 2011, forecasts that IT operational spending will increase by 2% at the median, based on a fourth-quarter survey of 136 IT organizations in the U.S. and Canada.

The anticipated growth is welcome news after two years of no change at the median, accompanied by substantial budget cuts by organizations at the 25th percentile. But the forecast is modest in comparison to the three years leading up to the recession.

Although 2% growth at the median is modest, the forecast for growth appears firm, based on actions taken by IT executives in the fourth quarter. IT organizations have been extending staff hours, adding temporary workers, and launching major projects that promise strong ROI or improved agility, our survey finds.

One net trend that is seen is IT organizations are having IT staff work more hours. In fact, only 1.5% of organizations cut hours, while 48.5% increased hours, for a net change of 47%.

Almost as aggressive is work on major projects, where the net trend is 46%. In fact, 56% of all organizations increased work on major projects over the past three months compared to only 10% that decreased expenditures in this area.

The good news continues: not only are IT organizations giving staff members more hours, they are hiring contractors and temporary workers and turning to outsourcing. The net trends for these two actions are 31% and 24%, respectively. These actions are a prelude to making a commitment to take on permanent, full-time workers.

However, the net trend for increasing the size of the IT staff is only 13%. The message seems to be that while companies are increasing IT operational spending, the commitment is still soft, and IT executives are willing to pay a bit of a premium to maintain a flexible workforce. 

More information on IT spending can be found at www.SupportIndustry.com.