CIOs predict rise of just two per cent in IT budgets for 2016

Budget for security, big data and cloud on the up - and data scientists

CIOs have predicted a modest rise of just two per cent in their IT budgets for 2016 - the lowest growth since 2012, according to research from best practice insight and technology firm CEB.

CEB found that operating expenditure for corporate IT is expected to surpass capital expenditure for the first time in seven years, while the number of people in IT functions will increase by 1.9 per cent in 2016, the highest growth since the 2009 recession.

Meanwhile, with the increased focus and attention on IT security - with high profile attacks suffered by the likes of ISP TalkTalk and dating website Ashley Madison, security budgets are expected to continue to grow from 5.2 per cent of the overall budget to 6.2 per cent.

The survey, which also looked at how the IT budget was spent in the last year, found that organisations had allocated more budget to business intelligence in the past year than in previous years, and that data scientists were expected to be present in the majority of firms by the end of next year.

This appears to contradict Gianmario Spacagna, a data scientist for customer and retail banking at Barclays, who suggested that firms would stop hiring data scientists when they realise that the majority bring no value.

Meanwhile, perhaps not surprisingly, almost all CIOs are allocating some budget to the cloud. In fact, almost half of companies allocate at least six per cent of total IT spending to cloud solutions now.

This is in contrast to spending on core infrastructure and process automation. Spending on infrastructure, such as data centres and networks, declined three per cent between 2013 and 2015 to 30 per cent, while spending on enterprise process automation (such as ERP) fell from 32 per cent of project budgets in 2013 to 30 per cent today.

The increased focus on business-led IT means that CIOs and their IT teams are operating in a more advisory capacity to other areas of the business, as the likes of marketing, sales and HR make more technology decisions and investments than ever before.

CEB found that in 2015, IT organisations that still owned delivery of most technology projects grew their budgets by 5.1 per cent, while those that frequently served as advisers saw their budgets contract by 2.3 per cent.

But CEB emphasised that shrinking IT budgets for these IT advisory-type teams didn't represent negative enterprise technology spending, but rather a healthy sign of IT's ability to support technology decision-making in the rest of the business.

It said that organisations that use IT advisory-type teams spend around 30 per cent more on analytics, usability, personalisation and collaboration, while also using more flexible approaches to budgeting.

"This slowing budget growth represents a tipping point in IT spending as organisations realise the benefits of adopting a more flexible, business-led approach to technology investment," said Andrew Horne, managing director at CEB.

"CIOs are rethinking the way budgets are allocated to focus on the speed of response to the rest of the business. In 2016, we expect the IT function to ramp up its role as consultant, broker, and coach to the rest of the enterprise," he added.

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