IT Budget Cuts Have Harmed Profit Margins & Innovation: Survey

A major new international study by BT Global Services has revealed a quarter of senior business executives globally believe IT budget cuts have harmed profit margins and innovation, with a similar number (23 percent) saying cuts have prevented them from winning business.

BT surveyed more than 2,400 IT users and 270 CIOs and senior executives across 13 countries including India. The results reveal that almost three fourth (73 percent) of Indian respondents have felt the impact of reduced IT budgets since the start of the recession. IT budgets were cut in 2009 for the first time in ten years, causing global underinvestment in IT. In the survey, almost 63 percent of the executives feel that India has passed the worst of the recession.

Jeff Kelly, CEO of BT Global Services, said, “This research provides a snapshot into the current mindset of global CIOs and senior executives, and it will hopefully act as a spur to action on key issues such as the role IT plays in driving global business success. In the current climate, CIOs face key decisions about how they approach the upturn, when it comes, to ensure they thrive.”

Today’s challenges globally

Across the board, over a quarter (27 percent) of senior executives say they have lost business during the recession because they were unable to find the right information in time to meet an important deadline, rising to a third (33 percent) specifically among CIOs, who are evidently aware of the issue.

Among Indian respondents, 91 percent have agreed that information management is crucial and very important to the future of their businesses. At the other extreme, 27 percent of Indian respondents believe that there is no market data that they need for the business.

On the topic of collaboration, almost 70 percent of Indian workers state that ICT enables them to collaborate seamlessly anytime, anywhere with customers, colleagues and suppliers. India is progressive in this area compared to global counterparts in the UK and the US with only just more than a third of workers in both countries able to seamlessly collaborate.

Regionally, however, a large proportion of workers in China (82 percent), Singapore (72 percent) and India (70 percent) are able to collaborate seamlessly with customers, colleagues and suppliers suggesting a disparity between mature and emerging markets.

2010 outlook

Looking to the future, it seems there is a reluctance to invest stringent IT budgets in new technologies such as cloud computing. More than half of CIOs globally (53 percent) fail to see how cloud computing can save them money, even though the cloud delivery model is designed to reduce or eradicate capital expenditure requirements.

Kelly said, “Although we are already delivering enterprise-level cloud services such as hosted IP telephony, for many organisations these services are still in their infancy. The lack of clarity about their benefits is understandable, and it highlights the work still to do for vendors and aggregators.”

The full report, ‘Enterprise Intelligence: the Challenge for the CIO in 2010’, can be downloaded from www.bt.com/globalservices