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IT budgets up, but salary cuts still a concern: study

For IT leaders and their tech teams, it's business as usual. IT departments are still looking for ways to reduce costs, still trying to increase employee productivity, and still cautious about raising salaries, according to the latest survey data from the Society for Information Management (SIM).

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While maintaining the status quo is the prevailing sentiment, one area that showed marked change in 2012 is IT spending. Companies funneled more of their revenue to the IT department this year than they did in 2011, SIM reports.

In 2012, the average IT budget was 4.94% of corporate revenue, up from 3.55% in 2011 (and a full percentage point higher than the average rate of 3.84% measured over the past eight years). Looking ahead to 2013, 46% of respondents expect IT budgets to grow, 32% expect them to stay the same, and 22% expect a decline.

SIM, which counts 3,500 CIOs and IT executives among its ranks, is hosting its annual conference, SIMposium, next week in Grapevine, Texas. Here are 12 tech trends the organization highlighted in its annual IT survey.

* Staff turnover remains low. Turnover among IT employees has been consistently low over the last few years, at 5.2% in 2009, 5.5% in 2010, 5.51% in 2011, and 5.23% in 2012.

* CIOs are sticking around for longer terms. At the highest tier, IT pros are keeping their jobs longer than they have in the past. In 2012, CIOs said they've had their jobs for 6 years on average, up from 4.5 years in 2011 and 5.1 years in 2010. Over the last seven years, the average tenure of a CIO was 4.6 years.

* Salary cuts a reality for more IT staff. Salaries increased for 60% of IT staff in 2012. Meanwhile, 29% reported unchanged salaries, and 11% said salaries declined in 2012. One troubling trend: More respondents reported shrinking salaries in 2012 (11%) than in 2011 (8%), and an even larger percentage (13%) expects to see salary cuts in 2013.

* Personnel costs consume the lion's share of IT funds. Where does the money go? A breakdown of 2012 IT budget allocations shows about 60% of monies are spent on people, including staff and consultants.

BUDGET BREAKDOWN

Internal domestic staff: 33%

Internal offshore staff: 6%

Outsourced domestic staff: 8%

Outsourced offshore staff: 3%

Consulting services: 9%

In-house hardware, network, software, facilities and asset depreciation: 24%

Outsourced hardware, network and software: 14%

* Outsourcing expenditures to climb in 2013. The percentage of budgets allocated to offshore outsourcing is expected to climb in 2013, according to respondents. It has generally hovered in the 4% range in recent years, falling to a low of 2% in 2011. In 2012, the percentage of IT budgets allocated to offshore outsourcing climbed to 5%, and respondents expect it to consume 7% of IT budgets in 2013. By geography, the largest percentage of offshore outsourcing work goes to India (43%), followed by western EU (13%), Philippines (12%) and eastern EU (6%).

* Training expenses are flat. Education and training have eaten up a consistently modest portion of the IT budget over the last five years, averaging 3.1%.

* Reporting structures vary. The corporate hierarchy varies for CIOs and senior IT executives. The largest percentage of CIOs (43%) report to the CEO. Another 27% report to the CFO, 19% to the COO, and 10% to a business unit executive.

* The CIO role is all about relationships. Nearly half of a CIO's time is spent managing relationships with business colleagues, IT staff and vendors.

HOW CIOS SPEND THEIR TIME

Relationship management with business: 24%

Relationship management with IT staff: 13%

Strategy: 12%

Operations: 11%

IT governance: 10%

Human resources: 8%

Relationship management with vendors: 8%

Architecture: 7%

Software development: 6%

Non-IT: 1%

* Outside talent eyed for CIO jobs. More CIOs come from outside the company than are hired from within, SIM reported. Among survey respondents, 54% said their current CIO was hired from outside the company, plucked from an external IT organization. Another 5% said their current tech chief came from outside the company, but from a non-IT organization. The remainder said their current CIO previously worked within the company's IT group (37%) or within the company, but outside of IT (5%).

* IT success = on-time delivery. Timeliness remains the most significant metric for IT. When asked to rank the top IT metrics, respondents cited: projects delivered on time, project ROI, projects delivered on budget, SLA targets, and productivity improvement.

* BI still commands mindshare. Compared to last year's survey, there's very little change in IT project popularity. Business intelligence, cloud computing, and ERP are ranked first, second, and third, respectively, in SIM's list of the top five applications and technologies. The top three are unchanged from SIM's 2011 survey. In fifth place, as it was last year, is CRM. The only newcomer to the top five is collaborative and workflow tools, which climbed from eighth place to fourth in the 2012 rankings.

* IT's moneymaking potential gains attention. Likewise, most of the management priorities for IT pros have a familiar ring to them: increasing business productivity, aligning IT and the business, improving business agility, and reducing IT costs. But one stands out. Revenue-generating IT innovations ranked fourth in the top 10 IT management concerns (it was ninth last year).

Ann Bednarz covers IT careers, outsourcing and Internet culture for Network World. Follow Ann on Twitter at @annbednarz and check out her blog, Occupational Hazards. Her e-mail address is abednarz@nww.com.

Read more about infrastructure management in Network World's Infrastructure Management section.


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