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IT Spending to Return to Pre-Recession Levels, Research Firm Says

Optimism blossoms among 133 Fortune 1,000 CIOs surveyed; business intelligence, collaboration and integration on 2011 shopping lists.

The Corporate Executive Board, a research and advisory services company, today released data that indicates a 3.3 percent increase in IT operational budgets for 2011, following two years of zero growth. This finding is based on the benchmarking of projected IT spending, staffing and project data of CIOs and IT managers at 133 Fortune 1,000 companies and collectively represents an IT spend of approximately $70 billion. Based on the projections, leading corporations are cautiously preparing for a return to growth.

CEB's research, conducted by its Information Technology practice, also revealed that nearly 45 percent of the IT project budget within the surveyed companies will be allocated to deploying business intelligence and collaboration tools or improving the customer interface. In fact, 10 percent more business intelligence and collaboration projects are expected to be undertaken in 2011 vs. 2010. This spending will come at the direct expense of process automation projects, which will decrease to 41 percent of the total projected budget.

"After two stagnant years, IT budgets are starting to reflect improvements in company performance. We've seen CIOs making structural changes to help IT support further recovery by increasing budgets close to pre-recession levels," said Shvetank Shah, executive director of the Corporate Executive Board's Information Technology practice, in a statement. "In addition to an increase in spending by more than 3 percent, CIOs are shifting investment from process automation to projects that foster better knowledge sharing, collaboration, and insight generation. It's no coincidence that these capabilities often have the greatest impact in the areas organizations look to for growth, such as sales and marketing, customer service and product innovation."

The survey found that two-thirds of CIOs will increase expenditures in 2011. This compares starkly with forecasts of last year, when 75 percent of CIOs expected operating budgets to remain flat or decline.

It also found that CIOs plan to integrate their traditionally siloed infrastructure and applications groups or merge IT into a cross-functional enterprise services organization. By 2012, 20 percent of organizations will be integrated into a multi-functional shared services organization, and an additional thirty-five percent of organizations will have integrated IT services, according to the study.

Two-thirds of total IT budgets will be continue to be consumed by "keep-the-lights-on" maintenance or costs associated with regulatory compliance activities, the research found. IT capital budgets will remain flat in 2011, at 0.6 percent of revenue, mirroring the lack of growth IT organizations saw in the last three years.

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