IT Budgets, IT Salaries Will Rise in 2011: SIM Report

Funding for IT budgets-including allocations for salary increases-will go up next year, but cost cutting is still a major concern. Business intelligence-despite its expense and effort-continues to be a No. 1 technology investment priority in 2010.

IT workers, listen up: Management is budgeting for raises next year.

These raises, however, come with an expectation for technology to be a strategic cost-cutting and simultaneous revenue-producing investment. Business intelligence-despite its expense and effort-continues to be the No. 1 technology investment of 2010.

In exact terms, 61 percent of executives are planning to give technology worker salaries a boost in 2011. Only a third of employers will be keeping salaries flat. The silver lining is less than 10 percent will be chopping salaries next year, according to annual data compiled by SIM (Society for Information Management), which surveyed more than 172 companies.

Of most concern to executives such as CIOs and senior IT managers is business productivity coupled with cost reduction. Other major concerns include speed to market, business agility, business and IT alignment and the reliability and efficiency of IT practices.

"The No. 1 response is getting more revenue from IT investments as in leveraging IT to reduce business costs," said Jerry Luftman, professor of information systems at Stevens Institute of Technology, in an interview with eWEEK. "It is also clear that the trend for offshore outsourcing is expected to continue to rise."

Luftman is a former SIM executive vice president who will be presenting the survey results to SIM attendees Oct. 3 at its annual conference in Atlanta. Luftman has been producing the research for this report for the last 10 years.

For IT budgets, 38 percent of executives are increasing them next year, 27 percent are decreasing them and 35 percent are keeping them flat. Compared to last year, there is an 11 percent increase in budget spending-a good sign for projects and resources that have been on hold or postponed.

Many executives are looking for IT to lead the way in business process re-engineering, in strategic planning and keeping data and intellectual property secure. Making the list of concerns for the first time, however, was globalization.

The No. 1 technology investment for these 172 organizations is BI (business intelligence). According to Luftman, BI has been the top technology investment for the last three years despite a recession and challenges for many with effective BI implementation. Given the emphasis on cost reduction, how is it that business intelligence ranks above virtualization, ERP (Enterprise Resource Planning), continuity planning/disaster recovery and cloud computing?

"I am surprised too that it remains so high other than they recognize its importance but are still struggling to implement it," Luftman said.

Cloud computing made the top five technology investments for the first time in this year's SIM report, further confirming its ascendancy as companies look to reduce costs in areas across the landscape of cloud-based services. Another trend that continues to be taken advantage of is offshore outsourcing, which will see an increase of 2 percent, from 5 percent in 2010 to 7 percent in 2011 IT budgets, according to the SIM report.

IT turnover rates were low in 2010, according to the study. Seventy-one percent of SIM survey participants saw less than 5 percent of IT workers leave their company. Nearly 16 percent saw 6 to 10 percent turnover. The average rate of turnover was about 5.5 percent for 2010; last year, that rate was 6.9 percent.

"The insights from the study confirm that the economic downturn is continuing to cause a significant shift in IT priorities," said Luftman in a SIM statement. "It is essential to recognize how organizations are leveraging IT during this prolonged economic conundrum, as well as preparing for when the economy will improve."
Another thing Luftman noted is that as the economy improves, many people are expected to hit the retirement ranks, though he expects see a larger hiring pool next year.