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Information Trumps Automation As Global CIOs Shift Budget Priorities In 2012

ARLINGTON, Va., Nov. 9, 2011 /PRNewswire/ -- New research from Corporate Executive Board (CEB) (NYSE: EXBD), a leading research and advisory services company, says CIOs expect to spend 39 percent of their 2012 project budgets on information management initiatives and 32 percent on process automation projects. This represents a significant shift in corporate IT departments' priorities as information outstrips process automation.   CEB also anticipates rapid growth in cloud and mobile applications spending.  Cloud spending is projected to increase by more than 20 percent and account for approximately 7 percent of total budgets; mobile applications will increase by more than 60 percent and account for roughly 4 percent of budgets in 2012.  

CEB anticipates that the increased focus on information over process, first seen in 2011, will continue into the foreseeable future.  The shift, which the company predicted in 2010 with its Future of Corporate IT study, is accelerated by the rise of big data and the desire for organizations to use information more effectively to gain competitive advantage.  

Related CEB research finds that supporting the mobile employee is a top infrastructure priority in 2012. CIOs are increasingly allocating budget to the conversion of existing applications as well as the development of new mobile apps.  They also continue to invest in infrastructure to facilitate mobility. Reducing infrastructure costs and supporting business innovation are also on the priority list and drive much of the increased interest in cloud-based services, particularly Infrastructure-as-a-Service (IaaS).

CEB's projections are based on the company's 2012 Global IT Budget Benchmarking report representing USD $38 billion in IT spending.  The report suggests that overall operating budgets will be roughly flat with growth of just under 3 percent -- less than a third of the actual increases reported in 2011. Capital expenditures will also flatten in 2012 after an increase of more than 20 percent in 2011, which allowed organizations to clear a backlog of projects left over from the recession.  With that backlog largely gone, IT capital expenditures will increase by only 5 percent in North America and will decline steeply (14%) in Europe amid economic woes.

"Most IT departments experienced significant budget increases in 2011 -- we saw it as a catch-up year coming out of the recession," said Shvetank Shah, executive director at CEB.  "This year we anticipate more modest growth as companies focus on realizing the benefit of their recent investments and continue to advance their level of sophistication while containing costs."

Other notable findings of CEB's 2012 IT Budget Benchmarking report include:
  • End-to-end Services Grow in Popularity -- the majority of CIOs (54%) are expecting to offer at least some end-to-end services in 2012. An additional 11 percent will move to a multi-functional shared services model in which IT becomes integrated with other corporate shared services. This trend is anticipated to continue far beyond next year. More than 70 percent of organizations will have a more integrated service offering by 2012.  
  • IT Staffing Remains Constant -- with approximately 60 percent of IT operating expenditure allocated to workforce, including internal staff, contractors and outsourcing providers, the allocation of IT staff remains stable. The highest staffed IT function is applications (41%), followed by infrastructure (22%). IT functions are also developing roles to help facilitate the transition to integrated service models.

"CIOs are working hard to balance innovation and austerity," Shah added.  "Our 2012 IT Budget Benchmarking report helps them understand how their priorities and investments stack up against their peers and lets them validate their thinking to ensure they won't be left behind when economic conditions improve."

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