September 24, 2012, 11:49 AM — Eric Lindgren, CIO at PerkinElmer, will spend the next 12 months like many of his peers: hunting for cost savings that can be re-allocated to high-impact technology initiatives, such as mobility and analytics. As part of this effort, his IT group will continue to streamline the company's application portfolio, move last year's acquisitions onto its corporate-standard ERP platform and shift some fixed investments into more variable models via a private cloud.
Lindgren also designed his budget so he can either curtail or expand his investments depending on how the global economy performs. "We're going into the year with contingency plans so that if [the economy] worsens or performs better than we expected, we can react quickly," says Lindgren.
Throughout the U.S., IT organizations are facing similar situations. According to Computerworld's Forecast 2013 survey, there is a sense of cautious optimism as IT organizations move into the new budget year. The percentage of respondents who said they're seeing an increase in their IT budgets was higher in this year's survey than it was last year: 43%, versus 36% last year. And 64% reported that they plan to make a major IT purchase or upgrade in the next 12 months, up from 60% last year (see charts, below).
More are also taking Lindgren's flexible approach to budgeting: They plan to track economic indicators and adjust their spending levels accordingly, says Andrew Horne, managing director at The Corporate Executive Board. In a recent survey, the business advisory firm found that budgets were expected to rise by just 1.5% to 2%, but Horne believes respondents might expand their spending beyond what they initially report, as they did last year. "People are very cautious as they do their planning, but if they see company or economic performance doing better, they're becoming more agile about being able to invest more," he says. "More people are looking at rolling budget scenarios, to formally embed a degree of flexibility."
Clearly, lessons from the recession are still top of mind: "Containing costs" was cited as the far-and-away No. 1 business priority among the 334 IT executives who participated in Computerworld's Forecast 2013 survey, and "economic pressure" was the top management challenge. And, as in last year's survey, when respondents were asked to name the single most important technology project they would undertake in the coming year, the top two responses were virtualization and the cloud, both of which promise to reduce operating costs.