CIOs are optimistic, but IT staff is getting burned out, say 2 new reports

IT spending is up this year and CIOs are optimistic but IT staff are getting burned out and morale remains alarmingly low, say two reports out this week.

IT spending this year will grow 6% over last year, with retail one of nine industries that will pace the market, says a report from Forrester Research Inc., based on interviews with 115 North American CIOs.

CIOs are hopeful that the economy is getting better and their companies will do better this year than last:
• 43% consider their business climate to be strong or very strong, up from 33% last quarter
• 55% expect spending to remain on budget during the next three quarters, and another 34% expect to outspend their budget—up from 25% in the previous quarter
• 66% describe research and application of emerging technologies as key parts of their IT strategy, and 66% expect to increase the attention they pay to R&D.

Forrester bases its expectations that IT spending for the year will come in slightly stronger than expected on two factors: the strong Q1 financial reports of 20 IT vendors and the 16% Q1 increase in new business investments in IT as reported by the US Department of Commerce.

The nine industries most likely to increase IT spending are retail and distribution, health care, media, non-bank finance, consumer goods, information technology, insurance, pharmaceutical and professional services. All have experienced above-average growth in revenues and profits during the past two quarters, Forrester says.

Forrester concludes:
• New investment for computers will continue to grow by 16% and communications equipment by 11%. Software spending will increase 9%, led by operating systems, systems management and security.
• IT outsourcing spending will grow 9%, while spending on IT consultants and full-time staff will grow only 3% and 2%, respectively.

IT staff charged with implementing the increases in spending aren’t happy, says the new 2004 IT Staffing and Compensation Guide by Meta Group Inc. Meta Group found that 72% of the more than 650 companies it surveyed characterized IT morale as a serious issue.

"Working through this prolonged recession, which has seen budget cuts across the enterprise, numerous staff cutbacks and general sector uncertainty, has definitely taken its toll on IT employee morale," says Maria Schafer, senior program director with Executive Directions at META Group, and author of the annual IT Staffing and Compensation Guide. "The combination of these factors creates a difficult situation for the IT organization: productivity is hurt by having fewer people, fewer investment dollars for projects, and a perception that companies do not focus on retention."

The problem, Meta says, “could spell longer-range turnover, lower productivity, and less overall shareholder value to the organization as a whole if not addressed.”

Meta reports that 45% of companies surveyed have implemented employee recognition programs as a means to boost morale, while 40%t have increased skill development opportunities. Career development programs are used as a means to improve employee morale at 23% of companies and professional development program at 10%. Only 4% are offering bonuses.