2012 IT SPENDING PREDICTIONS

FROM THE EXPERTS

See how experts and industry analysts expect IT spending to go in 2012.

A publication of Evolven Software

PREDICTIONS FROM THE EXPERTS [Pick the date]

2012 IT SPENDING PREDICTIONS

FROM THE EXPERTS

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2012 IT SPENDING PREDICTIONS

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Table of Contents
Triple Whammy Cuts IT Spending Growth Forecast for 2012 ................. 4 5 Areas That Will Drive IT Spending ........................................................ 7 Where the IT Dollars Are Headed in 2012 ............................................. 11 Retail Banking IT spending On the Rise Amid Economic Turmoil ....... 19 2012 IT Budgets Favor BI Projects, End-to-end IT Services Delivery...... 22 2012 IT budgets, Salaries on the Rise, Survey Says ............................... 30

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2012 IT SPENDING PREDICTIONS

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Triple Whammy Cuts IT Spending Growth Forecast for 2012

By Richard Gordon

Gartners U.S. dollar growth forecast for global IT spending in 2012 has been revised downward from 4.6% in the previous quarter to 3.7%. Faltering global economic growth, the eurozone crisis and the impact of Thailands floods on hard-disc drive production have taken their toll on the outlook for IT spending this year.

Faltering global economic growth, the eurozone crisis and the impact of Thailands floods on hard-disc drive production have taken their toll on the outlook for IT spending this year.

The combination of private-sector deleveraging and public-sector austerity would, on their own, be enough to put the brakes on economic growth, but the lack of political leadership to resolve the fundamental sovereign debt issues, most notably the eurozone crisis, is causing huge uncertainty for businesses and consumers. Although no one can predict how the eurozone crisis will unfold, the scenarios range from bad to very bad to catastrophic, depending on the ability of politicians to craft effective short-term measures to support debt-laden countries and longer-term structural reform. In this environment we expect both businesses and consumers in Europe to be cautious in the coming months about spending on IT products and services.

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2012 IT SPENDING PREDICTIONS

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To make matters worse, during the past quarter, a devastating flood left onethird of Thailand under water. Although the waters are receding, the magnitude of the disaster is only just beginning to strike home. Beyond the human tragedy, there are serious implications for businesses worldwide, particularly with computer and storage purchases. Thailand has been a major hub for hard-drive manufacturing, both for finished goods and components. Gartners current estimate is that the supply of hard drives will be reduced by as much as 25% (and possibly more) during the next six to nine months. Given the lead times involved in rebuilding the destroyed manufacturing facilities, the effects of this will continue to ripple throughout 2012, and possibly into 2013. Large PC OEMs are best-positioned to cushion the effects of the shortages and will see fewer problems than others in the industry. These companies already had contracts in place and quickly responded to the potential disruptions, locking in a portion of the diminished supply in new multiple quarter contracts. However, no company will be immune to the effects on the HDD supply chain, and we have reduced our shipment forecast for PCs, which has impacted the short-term outlook for the hardware sector.
Published: http://blogs.gartner.com/richard-gordon/2012/01/05/triple-whammy-cuts-it-spending-growth-forecast-for2012/

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2012 IT SPENDING PREDICTIONS

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About Richard Gordon

Richard Gordon is a research vice president in Gartner Research. He has worldwide responsibility for Gartner's Global IT Market Forecasting. Prior to joining Gartner, Mr. Gordon was at Advanced Micro Devices, where he was a senior product engineer supporting nonvolatile memory product customers across Europe. Before that, he was a transputer device engineer at the Inmos wafer fab in South Wales, and had previously worked with AB Electronics in the subcontract electronics assembly industry. http://www.linkedin.com/pub/richard-gordon/0/419/bb3

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2012 IT SPENDING PREDICTIONS

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5 Areas That Will Drive IT Spending

By Rob Preston

Gartner is getting cold feet on its original forecast for worldwide IT spending, ratcheting it back to 3.7% growth in 2012 from its earlier forecast of 4.6% growth. Gartner's reasons: slowing global economic growth, the eurozone crisis, and the impact of Thailand's floods on the production of hard disk drives. When assessing IT spending, doesn't anyone ask the folks who manage IT budgets anymore?

a robust 6.9%.)

56% of the respondents to our recent survey said they expect their companies to spend more on IT this year than they did last year.

InformationWeek did, for our Outlook 2012 report, for which we surveyed 605 IT professionals in October. We didn't home in on a percentage increase in total IT spending for the coming year, but we did find evidence that companies are a bit more bullish this year than they were last year. (Gartner's revised forecast is less bullish, as it estimates that worldwide IT spending in 2011 rose

In our survey, 18% said their companies will increase their IT spending by more than 10% in 2012, compared with 15% who said that last year, while the percentage of companies looking to spend between 5% and 10% more this year was down, to 24% from 27%. Companies looking to spend more on IT

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2012 IT SPENDING PREDICTIONS

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this year--but less than 5% more--is up slightly, to 14% of respondents this year from 13% last year. Overall, 56% of the respondents to our recent survey said they expect their companies to spend more on IT this year than they did last year, while only 16% expect their IT spending to decline. They expect to do some IT hiring as well: 25% of respondents to our Outlook 2012 survey said their companies plan to hire more IT pros this year, while only 9% expect cutbacks. Still, 30% of respondents expect their companies to freeze IT hiring this year, while 36% are hiring only to fill vacated positions. So cautious optimism prevails.

Most companies aren't leaping into the cloud, but they are spending more on select software and infrastructure services. The real enterprise spending will happen when companies rearchitect their data centers for cloud-like private services.

One big difference between Gartner's outlook and ours: Theirs is global; ours is U.S.-oriented. And while Gartner and other IT spending prognosticators rely heavily on economic trends (GDP growth, industrial activity, monetary stability) and the financials of bellwether companies (Oracle, Cisco, Microsoft, IBM, and the like), we stick close to the source of IT spending: the people who actually manage those budgets.

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2012 IT SPENDING PREDICTIONS

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And what they're telling us, as part of our extensive surveys and reporting, is that five core areas will drive their companies' IT spending higher in 2012: Mobile. Just since the beginning of the year, two high-profile organizations-Wal-Mart and the Financial Times--have acquired application development companies to bolster their mobile expertise specifically, as customers increasingly access their products from smartphones and tablets. Plenty of other companies are scurrying to access mobile talent by hiring specialists or working with contractors--or doing both. Big Data. As CKE Restaurants CIO Jeff Chasney argues in an InformationWeek column on the subject, big data analytics isn't an out-of-the-box software "solution." Companies will need to hire or contract people with chops in math and statistics, in addition to buying the latest software tools. Cloud Computing. As I noted in "Top 10 CIO Priorities," most companies aren't leaping into the cloud, but they are spending more on select software and infrastructure services. The real enterprise spending will happen when companies rearchitect their data centers for cloud-like private services, much like FedEx has done. Data Center Infrastructure. Virtualizing servers and storage and updating data centers to be more redundant, energy efficient, and automated will require companies to spend more money to save money. And the growth of both public and private cloud services will force providers to make big data center investments. Social. Companies under financial pressure (and who isn't?) must decide whether social networking is a core IT investment or just a nice-to-have. Through 2012, Gartner predicts, more than 70% of IT-dominated social initiatives will fail as IT pros "struggle with shifting from providing a

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2012 IT SPENDING PREDICTIONS

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platform to delivering a solution." Nonetheless, the stakes are high, especially for retail and other companies whose customers practically live on social media. Even B2B companies must come to grips with the fact that their customers are talking about them and their products on some form of social media, and their employees increasingly want to collaborate on social-like platforms.

Published: http://www.informationweek.com/news/global-cio/interviews/232400087

About Rob Preston

Rob Preston currently serves as VP and editor in chief of InformationWeek, where he oversees the editorial content and direction of its various website, print and digital magazine, Webcast, live and virtual event, and other products. Rob has 25 years of experience in high-tech publishing and media, during which time he has been a senior-level editor at CommunicationsWeek, CommunicationsWeek International, InternetWeek, and Network Computing. Rob has a B.A. in journalism from St. Bonaventure University and an M.A. in economics from Binghamton University. http://www.linkedin.com/pub/rob-preston/3/746/2b0 http://www.twitter.com/robpreston

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2012 IT SPENDING PREDICTIONS

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Where the IT Dollars Are Headed in 2012

By Guy Currier

Capital spending on server hardware and virtualization software will grow more slowly in 2012 than in previous years, as spending on cloud computing rises. This is just one of the many budgeting trends revealed in CIO Insights 2012 IT Investment Patterns Study. Managed services expenses also seem to be losing steam. But these dollars arent going directly to cloud computing. Instead, they are being used in 2012 to increase budgets for mobility and infrastructure support areas.

A good deal of spending is shifting to mobility. Large enterprises are rapidly pushing applications out to mobile users. Theyre doing this with mobile app development, the single hottest budget area by far.

In fact, the 2011 spending trend we detected six months ago in our midyear budgeting report (Infrastructure Back in the Mix, CIO Insight, May 2011) looks likely to continue in 2012. Organizations are showing greater interest in their investments in infrastructure, after several years of cost-mitigation efforts brought on by the Great Recession. While infrastructure spending for 2011 was mostly about hardware, our latest research shows that 2012 will be about operations software as well.

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At the same time, a good deal of spending is shifting to mobility. Large enterprises are rapidly pushing applications out to mobile users. Theyre doing this with mobile app development, the single hottest budget area by far, and by building out their wireless networks. Midrange enterprises tend to lag somewhat in new market development and so are still in the mobile device deployment stage, while also rolling out certain business applications such as ERP and CRM. CIO Insights 2012 IT Investment Patterns Study was fielded Nov. 1 to Dec. 8, 2011, and was designed by CIO Insight in conjunction with the research division of the publications parent company, Ziff Davis Enterprise. A random selection from the companys lists of readers and site visitors was invited by email to participate. The study was conducted online. The survey was completed by 329 respondents in organizations with 50 or more employees who are familiar with their organizations budgetary and spending levels. (Click here to view a PDF version of the full report, with charts and graphics.) IT security is another active 2012 investment area. More firms than ever are adding security budget areas, such as identity and rights management. Overall, fewer organizations are planning to budget in 2012 for most of the 75 investment areas we examined than they planned in 2011. But, in IT security specifically, more organizations are budgeting for most budget lines.

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2012 IT SPENDING PREDICTIONS

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What were seeing here is the effect of three separate broad trends: innovation, integration and reversion. Innovation: Heres where mobility and cloud-related investments grow. The rise of the former has been so strong that its one of the leadersat least in popularity (number of organizations budgeting), if not always in strength (average amount invested). Integration: Innovative areas dont squeeze outestablished ones: infrastructure hardware or software. After all, server, storage and virtualization spending continues to grow. But these are large budget areas and tend to be well-integrated (or, in the case of virtualization it seems, newly integrated) into ongoing deployment and investment. So all that happens is that some of their dynamism gets lost to the newcomers. Reversion. This is where a previously integrated investment area might have been neglected, usually for economic reasons, even as the need for it continued to grow. Security spending patterns revealed in this years study are a perfect example of this. Threats and risks have hardly fallen over the years; on the contrary, mobility, cloud computing and even virtualization all have revealed new and not fully addressed security landscapes. After some neglect, these are being dealt with in 2012 with new investment activity. (Weve experienced a similar reversion trend in hardware investment over the past two years, when a pent-up need for refreshes and upgrades caused increased spending levels that now, as noted earlier, look as if they will return to more normal levels in 2012.)

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2012 IT SPENDING PREDICTIONS

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For IT strategists, there is also something of an object lesson to be found in how spending gets transferred rather than savings realized. When low-cost alternatives to established technologies arise, such as virtualization and cloud computing, they dont tend to reduce overall IT spending, even though thats how theyre sold to the finance masters. Looking at infrastructure hardware, for example, we see that growth rates are losing steam going into 2012. For example, on average, firms are growing server budgets by only 4.2 percent, which is slower growth than 54 of the 75 budget lines in the study. And its not just capital outlays: Managed services, a popular expense-based alternative, is entering a similar funk, with average budget growth of only 1.4 percent. Even growth in virtualization software spending is down from previous years. Various cloud computing approaches are likely taking the place of these technologies, but only on the margins for now. Thats because, overall, cloudrelated budgets arent taking up all the growth. As IT infrastructure managers know, development of the cloud, while rapid, has hardly made it anywhere near as common as even virtualization, let alone traditional on-premises hardware approaches. Plus, in spending terms, the cloud is cheaper than other IT budget lines. For example, the cost per employee is lower for private clouds than it is for servers or virtualization. And, in large organizations at least, the cost per employee for cloud services compares even more favorably against other spending areas. Its worth noting, though, that some of that cloud spending occurs outside of dedicated cloud budgets. Large organizations, in particular, are spending significant shares of their enterprise applications budgets on cloud-based applications.

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2012 IT SPENDING PREDICTIONS

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What spending areas are growing? IT infrastructure operations, for one. This is much needed as the technology environment becomes more distributed and more mobile. Average growth of desktop management budgets will be 13.6 percent in 2012, and application management and governance systems arent far behind, with average increases of 11.8 percent and 10.8 percent, respectively.

What spending areas are growing? IT infrastructure operations, for one. This is much needed as the technology environment becomes more distributed and more mobile.
Probably the biggest budget-taker is mobility. In large companies, this also encompasses spending on wireless infrastructure. Both budgets show accelerating growth rates going into 2012. Not only are the vast majority oforganizations (91 percent) expecting to spend on mobile devices in 2012, but the average year-on-year budget increase for mobile devices in these firms is 14.6 percent, greater than all but three of the 75 budget areas in our study. And wireless equipment expenditures are increasing to match, with average year-on-year budget growth of 14.4 percent. The next wave in this development, which we see clearly in large organizations, is mobile-based software. Mobile apps account for an average

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of 9 percent of business-application spending in large enterprises, andmidrange organizations are not far behind. In IT security, more organizations are spending in two specific areas in 2012 compared with 2011: Rights management, where the share of firms spending increased 14.2 points, from 47 to 61 percent; Identity management, with a share increase of 12.2 points, from 65 to 78 percent. Other hotbeds of security spending include cloud- and mobile-related areas such as encryption (up 11.1 points in share, from 70 percent in 2011 to 81 percent in 2012) andauthentication (up 10.1 points, from 65 to 75 percent).Some of this spending is shifting out of more-established IT security areas, such as security management, where the share of organizations budgeting has gone down by7.1 points (from 89 percent share in 2011 to 82 percent in 2012), and antivirus, down by 6.8 points (95 to 88 percent). Wed also like to make a special mention of business intelligence, which has become one of the most popularareas of IT investment. Nearly nine in 10 organizations are budgeting BI for 2012. The rise in investment should astound anyone: More organizations will spend on BI in 2012 than on any other kind of application. By comparison,84 percent are budgeting for traditional desktop productivity applications, 83 percent for project management and an equal number for collaboration solutions, and 82 percent for human resources apps. Across all 75 budget areas,BI will be the seventh most common in 2012.

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2012 IT SPENDING PREDICTIONS

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Elsewhere in enterprise applications, collaboration, and content and project management are rapidly gaining popularity, which makes sense given the new mobile opportunities for these categories. Collaboration and content management are seeing increases in 2012 over 2011 of roughly 10 percentage points in the number of organizations budgeting; and among those that already were spending in these areas, budget growths are averaging 14.6 percent and 7.3 percent, respectivelyboth significantly higher than 2011s growth. Veteran IT hands will see much that is familiar in this report. Sure, virtualization has made IT infrastructures strikingly more efficient. But by now, virtualization has simply been incorporated into the fundamental IT tool box. Virtualization, while one of the most important IT tools available, is not quite the wave it was promised to be. The expectation was that it would fundamentally rewrite the rules of computing architecture in the space of a few years. Its future is bright, but it should not obscure the truly revolutionary technologies that will reshape IT. We can say the same about cloud computingand eventually, we suspect, mobility. If theres anything to be learned from the hardware infrastructure investment weve seen in the past two yearsand the security investment were expecting in the year to comeits that phases and fads energize an entire market. Its only the short-term timing of investments that can fool us: Thats when were justifying and implementing new technologies whenwe havent fully seen how they stimulate the old ones.
Published: http://www.cioinsight.com/c/a/Research/Where-the-IT-Dollars-Are-Headed-in-2012-886160/

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About Guy Currier

Guy Currier is the head of global research at Ziff Davis Enterprise and provides market insights for the IT industry, supervising all editorial and custom client research development and operations. His analysis and opinions appear in eWEEK, CIO Insight, Baseline and Channel Insider. He has produced technology market research and analyzed technology trends for fifteen years, previously holding marketing and research positions at PC Magazine, Ziff Davis Internet, General Electric, and Fast Company magazine. http://www.linkedin.com/in/guycurrier https://twitter.com/GuyCresearchIT

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Retail Banking IT spending On the Rise Amid Economic Turmoil

By Jaroslaw Knapik

Global spending on retail banking technology will increase by $3.6bn (3.2 per cent) in 2012, and will hit $135bn over the next five years, according to Ovum. In a new forecast*, the independent technology analyst reveals that banks in emerging economies in the Asia-Pacific region will grow the fastest, at a rate of 8.3 per cent in 2012, hitting $10.2bn by the end of the year. Meanwhile, Western Europe will have the lowest growth of all the regions (1.9 per cent), despite being the second biggest market in terms of overall spend, reaching $44bn by the end of 2012.

Global spending on retail banking technology will increase by $3.6bn (3.2 per cent) in 2012.

The technology investments will be mainly driven by the need to grow revenues but the changing regulatory compliance will also contribute significantly, says Jaroslaw Knapik, Ovum financial services analyst and author of the forecast. Returning revenues to pre-recession levels will be a priority for a number of institutions, as too will be the focus on improving customer trust and increasing sales and servicing effectiveness. This will lead to accelerated investment in channel technology, predominantly online banking, which will become the fastest growing area globally in 2012, rising 5.3 per cent, to hit $8.3bn by year end. Elsewhere, mobile will see an

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increase of 5% globally in 2012, reaching $3.3bn, while management information systems and multi-channel integration/customer information systems will also see high growth rates. Technologies that allow smarter selling and servicing, such as customer analytics and customer data management, are expected to remain hot areas in the near future, comments Knapik. As sales activities are expected to be on the rise again, banks will also boost investments into operations as the ability to sell products faster and service customers better will continue to be a competitive differentiator in the retail market. With risk and compliance permanently on the CIO agenda, ever-increasing regulatory expenditure, which in 2012 will be predominantly related to DoddFrank and Basell III, will drive investments into technologies that reduce costs, such as data management, business process management, business intelligence, and analytics. Global spending in areas, such as risk management, anti-fraud, compliance, and performance management, will experience growth of 4.6 per cent, hitting $6.1bn by the end of 2012 and $7.6bn over the next five years. However, emerging economies in Asia-Pacific will experience the highest growth, at 8.8 per cent to hit $521m by year end, although North America will grow the fastest by volume, an increase of $95m, reaching $2.2bn. Regulatory demands are forcing banks to invest in their core systems. While in many cases tight compliance timescales lead to the quick-win type of enhancement strategies, the ongoing nature of regulatory demands, together with the need to revamp the wider bank to allow the adoption of newer

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business models, is now driving significant interest in core system transformation, concludes Knapik.
Published: http://ovum.com/press_releases/retail-banking-%E2%80%93-it-spending-on-the-rise-amid-economicturmoil-2/

About Jaroslaw Knapik

Jaroslaw Knapik is a Senior Analyst within Ovums Financial Services Technology team. Jaroslaw specialises in the technologies used within retail and universal banks, as well as within wealth management institutions, with a particular focus on middle-office technologies, outsourcing trends and IT spending, market sizing, and investment trends across the Americas, EMEA and Asia-Pacific. http://www.linkedin.com/in/jarekknapik http://twitter.com/jarekknapik

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2012 IT Budgets Favor BI Projects, End-to-end IT Services Delivery

By Karen Goulart

The CIO Executive Board of The Corporate Executive Board Co. (CEB) recently released its 2011-2012 IT Budget Benchmark. CEB surveyed CIOs at 178 organizations globally to assess technology spending, staffing and outsourcing. IT budgets will be scaled back in 2012 after rapid rises in 2011, the study showed. In 2011, the majority of projects were in the area of information management, rather than process automation -- a trend that is predicted to accelerate in the coming year, even as budgets decrease.

behind them.

Information projects are the ones in resurgence right now because that's where the world is moving. We are beginning to exhaust the process opportunities.

It's also expected that the new year will see more companies adopt an integrated IT services model, with a majority of those surveyed planning to offer some end-to-end IT services by year's end. CIO Executive Board Executive Director Shvetank Shah talks about the numbers and the trends

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2012 IT SPENDING PREDICTIONS

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Q: After double-digit increases in 2011, in 2012 operational expense [opex]

budgets are expected to grow by only 2.9%, but capital expense [capex] budgets will grow by 5.1% in North America and drop by 14.2% in Europe. Why the dramatic shift?

A: After the economy crashed in the late-2008-to-early-2009 period, spend

just completely dried up as companies ratcheted back their capex. In 2009 the increases were pretty much zero. As we got into 2010 and finally 2011, all of that pent-up demand for IT finally started working its way through the organization. The good news is that spend will continue to grow in 2012, but not at the same clip that we saw coming into 2011. If you look at the big consulting firms, they reported a banner year this past year, they've had a ton of growth, but they're all lowering expectations off that growth.

Q: What types of projects were addressed in technology budgets in 2010 and

2011 as far as pent-up project demand?

A: We know they focused on information over process. Beyond this, we don't

have much detail as to what those projects were, but what's interesting to us -and it's part of the consistent trend as we move into the next two or three years -- is that folks are going to be working on more projects in what we are calling the information space. That includes more in collaboration, customer interface and BI [business intelligence], and less in the classic ERP or process automation space. This is one of the big mega-trends affecting IT -- the types of projects that folks are working on changing away from big ERP to big information.

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Q: Why did information management projects outstrip process automation

projects in 2011 IT budgets?

A: You can take just about anything a modern company does and classify it
in some kind of process taxonomy. So, we actually took all of the activities of a modern company and broke them into 500 capabilities that they represent. Then we tried to investigate which of those can be supported by what we would traditionally call process-driven -- where you can actually take the activity and map it and measure it. Then we looked at those remaining capabilities that could not be mapped -- think collaboration, think about any other knowledge work like research and development, think marketing, think customer service. We call those information projects. and we find those projects very different because of the underlying work that gets done; those processes are very hard for IT to label because they cannot draw them on a flow chart.

That is, in terms of profitability, of marketshare growth -- all of the usual suspects that the average business GM would think about. And so we're seeing CIOs redenominate what they do in the form of end-to-end IT services.

For our CIOs, the No. 1 area of interest is how you do end-to-end services.

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Information projects are the ones in resurgence right now because that's where the world is moving. We are beginning to exhaust the process opportunities. Most Fortune 500 companies have done their big ERP; that's been going on since the 1990s, and we're coming to 2012. This is not to say companies will not continue to do some work [in ERP], but the real action right now is in business intelligence (a classic information-driven project), as well as [in] collaboration and anything at the customer interface -- from either understanding the customers' patterns, performing customer service or empowering salespeople through IT to be better at their sales jobs. All of these line up with information and analytics. What remains to be done for IT, increasingly, are those information projects, not the process projects.

Q: What is an integrated IT services model, and why is this shift happening? A: Traditionally, if you look at an IT organization, it offers its services in the
form of one of two things. Either they're offered in projects, like a supply chain project or a CRM [customer relationship management] project or they're offered in infrastructure terms, like provision of telecom or bandwidth to the business. That's been the unit of transaction between IT and the rest of the company. What we're hearing increasingly from the smart CIOs in the business is that IT, whether it expresses, or sells itself in those terms, becomes less relevant to the business partner, who at the end of the day is trying to define life in terms of outcomes. That is, in terms of profitability, of market-share growth -- all of the usual suspects that the average business GM would think about. And so we're seeing CIOs redenominate what they do in the form of end-to-end IT services.

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And this has nothing to do, by the way, with SOA [service-oriented architecture] or anything else. It's not a supply-side solution, it's the unit of measure, it's their currency. What it means is that you take everything you do and you express it in a handful of services probably 15 to 20 services. That's your service catalog, that's the menu you go out with. We're finding increasingly IT organizations denominating themselves in this form of an end-to-end IT service, and in many cases actually reorganizing themselves. So, they're collapsing what used to be standalone applications and infrastructure teams into a service management or service delivery organization. And each service will have a service manager. Think of this as an account manager who sits on top of it, whose job is not around delivery but

IT organizations denominating themselves in this form of an end-to-end IT service, and in many cases actually reorganizing themselves. So, they're collapsing what used to be standalone applications and infrastructure teams into a service management or service delivery organization.

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whose job is to be the account manager of that service connecting back to the business. So, it's their job to understand the business's appetite for that service and how that service can be improved.

Q: Can you give an example of how this works? A: Look at claims processing. There's a core claims processing system, and
there's probably a document management system that does all the managing of the information that flows around. Then you've got to integrate that with accounts payable, with archiving, with e-discovery, with printing -- all of these systems that support the act of claims processing. Underneath all of that, you have the infrastructure, the hosting, the storage, the network, as well as all the supporting engineering required for it. An IT service called claims processing provides all of the technology for all of the phases of the claims process, including investigating, reserving, reporting and disposition of claims. It's sold and denominated in that [service] unit, so it's going to cost you, say, $50 a claim; and you're no longer in the business of prioritizing between the document management system and how it talks to all the other systems and how you pay for all of those and how you upgrade all of those. You are denominating yourself in the form of a service -- it's an end-to-end IT service. There are few companies that have completely sort of flipped the switch [to IT services] on Day 1 and got it. It takes them between three and six months to actually go from being organized and aligned in a traditional IT format, to a service management format. But most folks are doing this in a staged or staggered format, where they are coming up with a few services and taking it from there. You still have a lot of legacy stuff, so it's going to take a while for people to be completely in an end-to-end services model.

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Q: What effect will this have on traditional IT services models, staffing and the
responsibilities of the CIO?

A: It's huge. We'll see restructuring happening in something on the order of

between 45% and 50% of the IT organizations that go through this. Portfolio management and a bunch of processes change. The role of having a standalone apps or infrastructure person changes. You might just have one person become the head of IT services delivery. For our CIOs, the No. 1 area of interest is how you do end-to-end services.
Published: http://searchcio.techtarget.com/news/2240111986/2012-IT-budgets-favor-BI-projects-end-to-end-ITservices-delivery

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About Shvetank Shah

As Executive Director of Corporate Executive Board, Shvetank Shah leads a global team that provides best practice research, decision support tools, and executive education to networks of more than2,500 IT leaders, including CIOs, enterprise architects, Applications, Infrastructure, Security, and PMO executives. He also sits on the firm's Policy and Operating Committees. http://www.linkedin.com/in/shvetank

About Karen Goulart

Karen Goulart is features writer for SearchCIO.com and SearchCIOMidmarket.com. She covers CIO strategies for cloud computing and virtualization, the data center and business application trends. http://www.linkedin.com/pub/karen-goulart/a/3a3/234 https://twitter.com/enterprisecio

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2012 IT budgets, Salaries on the Rise, Survey Says

By Carolyn Duffy Marsan

IT budgets, salaries and staff turnover rates have returned to pre-recessionary levels, according to a new survey conducted by the Society of Information Management (SIM) that indicates increasing optimism among CIOs and IT executives nationwide. IT executives say their departments are better positioned then ever to meet the needs of their organizations, whether that is by reducing business expenses through automation or by bringing new services quickly to market.

85% of IT executives are predicting that their 2012 IT budgets will be greater than or equal to their 2011 figures.

"This survey shows the success of IT departments and how they are working with their business partners to leverage IT and to reduce business expenses," said Jerry Luftman, lead researcher for the SIM survey and a professor at the Stevens Institute of Technology. "Companies aren't looking to IT as the first place to slice and dice." The outlook for IT budgets is solid, with 83% of survey respondents reporting that their 2011 IT budget was greater than or equal to their 2010 IT budget. This figure compares to 48% reporting stable or growing IT budgets in 2009.

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Similarly, 85% of IT executives are predicting that their 2012 IT budgets will be greater than or equal to their 2011 figures. Only 65% of respondents made this prediction two years ago. Another positive indicator is that IT budget allocations will remain steady in 2012, with internal staff expected to receive the largest share of the pie at 37% of spending compared to 38% this year. The SIM survey indicated no plans by management to increase offshore outsourcing, which has been a fear among IT professionals over the years. CIOs reported that they spent only 2% of their 2011 IT budgets on offshore outsourcing and 3% on domestic outsourcing. For 2012, they are projecting the same level of investment for offshore and domestic outsourcing.

As far as salaries are concerned, 92% of CIOs say that their 2011 IT staff salaries were greater than or equal to 2010 levels. This compares to 81% reporting stable or increasing salaries in 2009 and 83% in 2010.

Another indicator that IT departments were returning to pre-recessionary levels of activity is that 2011 IT budgets represented 3.55% of corporate revenues, which compares to 3.5% prior to the recession.

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Similarly, IT staff turnover rates returned to 7.06% in 2011, which compares to pre-recessionary level of 7.2%. The turnover rate peaked at 8.4% in 2008, when layoffs were common. "It's pretty neat that the staff turnover rate is so low," Luftman said. "It's low for a couple reasons. Baby boomers are not retiring because they can't afford it, and people aren't finding other jobs with higher salaries. But the entry-level job market is terrific." As far as salaries are concerned, 92% of CIOs say that their 2011 IT staff salaries were greater than or equal to 2010 levels. This compares to 81% reporting stable or increasing salaries in 2009 and 83% in 2010. For next year, 94% of CIOs predict that their 2012 IT staff salaries will be greater than or equal to this year's level. In 2007, only 78% of CIOs made this prediction. One surprise finding was that CIOs are not planning to allocate a significant amount of their IT budgets to internal or external cloud computing services. Although cloud computing was listed as one of the top applications that CIOs are investing in during 2011, they are spending only a tiny amount of money in this area: an average of 6% of their 2011 IT budgets on internal cloud projects and 5% on external cloud efforts. "The investment numbers for cloud computing are less than what the hype would suggest," Luftman said. "People are still trying to understand cloud computing and figure it out, and they are recognizing that it is not an inexpensive migration. Today may not be the best time to invest in cloud, although people are paying attention to it."

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Luftman said the overall findings of the SIM survey are that IT is a good place to be in the enterprise and that it's getting better. "IT is very dynamic," Luftman said. "There are new infrastructure technologies available, including cloud computing and virtualization. There are new applications and services. There are the push toward business intelligence, the consumerization of IT and social networking. This is all going on at the same time, which makes for a very, very interesting time period."
Published: http://www.networkworld.com/news/2011/100411-sim-survey-251549.html

About Carolyn Duffy Marsan

Carolyn Duffy Marsan is a Senior Editor for Enterprise Applications, Network World. Experienced reporter and editor covering business and technology. Produces accurate, thoroughly sourced, well-written articles on deadline for online and print publications. Excels at breaking news, news analysis and feature writing. Recognizes hot topics and knows how to exploit them online with creative headlines, writing and sidebars that generate page views and community discussion. Strengths include identifying and analyzing technology trends, exploring the business implications of new technology and explaining complex subjects in straight-forward terms. Extensive knowledge of the Internet, telecommunications, information technology, venture financing and government contracting. http://www.linkedin.com/pub/carolyn-duffy-marsan/5/625/796 http://twitter.com/techoptimist

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About Evolven

About Evolven
Evolven redefines configuration management and change management with its groundbreaking Change & Configuration Monitoring solution. Evolvens software-as-a-service solution enables companies to dramatically increase the stability of their IT environments, reduce the risk of production outages, lower operating costs, and cut environment incident investigation time and effort.

Evolven's Change and Configuration Monitoring eliminates production outages. Really.

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