Chief information officers (CIOs) are being given a little bit of wiggle room from the intense cost-cutting pressures that have tethered them over the past few years, and expect to increase their IT budgets by an average 2.5 percent this year, according to Gartner Inc.

The market-research and consulting company released results of a survey of over 1,300 CIOs in some 30 countries on Friday, finding that although CIOs are able to double last year's budget increase, they must target their investments to areas that foster growth, such as improving business processes and use of business intelligence.

While a global economic downturn forced many CIOs to carefully watch their budgets and trim costs as well as staff over the past three years, a gradual upturn in the economy has given them more freedom. However, now back in a spending cycle, many have found that their roles have changed, Gartner said.

CIOs are now considered more central in helping companies meet growth expectations, and IT investments are being targeted at areas that drive profitability, such as reengineering business processes from a customer perspective, Gartner said. The researcher predicted that this trend would continue through 2008 as companies strive to find new ways to stimulate growth.

"IT budgets are now lock-step with business budgets and investments aren't being given ahead of results," said Gartner research director Marcus Blosch.

CIOs must make sure that they are providing a stable core of IT services, before they look for further investments, and need to clearly understand business priorities, Blosch said.

Responding to these expectations, CIOs surveyed named business process improvement, security breaches and cutting enterprise-wide operating costs as their top business priorities for 2005. Top technology priorities, meanwhile, were investing in security enhancement tools, business intelligence applications and mobile workforce enablement, Gartner said.

CIOs' new roles also come with new challenges, however, as two-thirds of the executives surveyed said that they see themselves at risk given the chief executive officer's view of IT and its performance, Gartner said. The researcher suggested raising the quality of IT services and providing measurable proof of their value.

Another challenge seen by CIOs is a lack of staff that can help them meet new IT goals. Just 39 percent of CIOs surveyed said that they currently have the right people to meet present and future business demands.

Finally, 51 percent of CIOs surveyed said they had concerns that an aging workforce wouldn't be able to meet new IT needs, such as handling IT governance and business relationships, and that they might have difficulty attracting new people with the right skills, Gartner said.

Still, Blosch characterized CIOs attitudes as "cautiously optimistic," adding that if they play their cards right, they have real opportunities to show their worth to the company.

IDG News Service

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