CIO Magazine Reports IT Spending Projections Pick Up

FRAMINGHAM, MA – JUNE 29, 2007 – Results of the quarterly CIO Magazine Tech Poll show improved IT spending projections with CIOs predicting IT spending increases of 7.2% over the next 12 months (vs. 5.1% in March). Spending projections in most categories improved sequentially, although expectations for increases in Data Networking, Computer Hardware, and Security Software declined versus March.

"Spending projections improved for all but the largest companies, which bodes well for improving corporate spending in the second half of the year," says Chris Whitmore, Director, IT Hardware Research for Deutsche Bank Securities. "We expect improved sentiment and pent-up demand resulting from slower spending in the first half to drive stronger second-half corporate spending."

Gary Beach, Publisher of CIO magazine, adds, "Across the full spectrum of firms–from those with under 100 employees to those with 5,000 or more–the adoption of software virtualization is gathering momentum."

However, Dr. Ed Yardeni, Chief Investment Strategist for Oak Associates, cautions that CIOs aren't buying into extreme economic scenarios. "Their budget plans suggest they see moderate growth ahead, rather than either a boom or a bust."

The CIO Magazine Tech Poll provides technology and business executives, economists, and policymakers with a tool to gauge technology growth trends to assess the impact on the overall economy. Poll panelists are asked to answer questions on overall current and projected IT budgets on a quarterly basis. Also covered are future spending plans for IT hardware, software, services and Internet initiatives. The results of the quarterly poll, conducted from June 7-14th, are detailed below.


The CIO Magazine Tech Poll results are used to construct the CIO Magazine Tech Future Growth Index (TFGI), which projects IT activity over the next 12 months(1). In June the TFGI was 2.7, up from 1.8 in March (Tables 1 through 3, providing historical data and selected charts, are available at ).


In the latest quarterly poll, panelists project IT budgets to grow by 7.2% over the next 12 months, up from 5.1% last quarter. In addition, CIOs report that IT budgets increased by an average of 6.1% over the last 12 months, up from 5.7% last quarter.


When asked about spending across eight specific IT categories, the average number of panelists who plan to increase spending over the next 12 months is 38.3%, up from 36.8% in the last poll. Panelists who plan to decrease spending are 14.0% (vs. 15.3% in March). Within the IT spending categories, Storage Systems succeeds Data Networking Equipment as the top spending priority in the poll with 54.1% of respondents planning to increase spending in this segment (vs. 46.3% reported in March). Security Software is the second spending priority with 41.6% of CIOs expecting increased spending (down from 43.5% in March).

Computer Hardware: June results indicate that 40.8% of panelists plan to increase spending on computer hardware (down from 45.5% in March), while 17.6% intend to decrease spending (vs. 17.9% in March).

Compensation Costs and Labor Market Conditions: IT compensation costs (including salaries, benefits, and bonuses excluding stock options) increased an average of 4.3% in the 12 months ending June, down from 5.2% in the last quarter. The supply of labor moderated somewhat as 3.2% of the respondents report IT labor is 'plentiful' (vs. 7.3% in March), while 58.9% cite IT labor as 'available' (vs. 46.0% in March). Of respondents, 37.1% report IT professionals are 'hard to find' (vs. 44.4% in March).

Special Questions: This quarter's poll includes four special questions. The first question asked panelists if they would consider giving select members of their staff a one-year sabbatical to help improve the teaching of math and science in America's middle schools and high schools. Nearly half the respondents (54.4%) might consider such a plan while 34.4% of the respondents said they would never consider it. The remaining 11.2% cite that they would certainly consider such a plan.

The second question asked panelists if pending announcements from Microsoft on the inclusion of embedded virtualization solutions within Microsoft Server 2008 had an impact on their virtualization plans. The majority (80%) of the panelists said it does not impact their virtualization plans, while 18.4% of the respondents said their virtualization plans will be delayed somewhat. A scant (1.6%) of the respondents said that their virtualization plans will be delayed or changed significantly.

The third special question asked panelists whether they had implemented server virtualization (e.g., VMware) in their server environments. Of the respondents, 28.8% said they had implemented it on new hardware while 25.6% of the panelists said they had implemented it on existing hardware. Of the remaining 46% of respondents, 21.6% said that although they hadn't implemented server virtualization they were seriously considering it, while 16.8% said they had not implemented it but were getting interested. The remaining 7.2% of respondents hadn't implemented it and said they were not interested.

Following up on the virtualization question, the fourth question asked panelists whether they had reduced server spending after implementing server virtualization. Of the respondents, 7.1% had reduced server spending by roughly 50%, while 15% of the respondents had reduced spending by 30% and 21.3% had reduced server spending by 10%. The majority of respondents had not reduced spending (15%) or cited "not applicable" (41.7%) as they had not implemented virtualization.


The CIO Magazine Tech Poll was created by CIO magazine in August 2000 in association with well known economist Dr. Ed Yardeni, Chief Investment Strategist, Oak Associates. The poll is proving to be an accurate indicator of technology spending trends. The latest poll opened on Thursday, June 7th, and closed on Thursday, June 14th. An invitation to respond to the poll was distributed via e-mail to a panel of more than 2,000 chief information officers and 3,000 randomly selected CIO readers who match the job function criteria "CIO."

Demographics: In the June poll, there were 125 responses with large firms (1,000-5,000 employees) representing almost 27% of the results. A broad cross-section of industries are represented, including finance (13%), technology services (11%), state or local government (11%), education (10%), health care (8%), and non-computer/communications related manufacturing (12%).

The complete June CIO Magazine Tech Poll can be found at

Previous poll results can be found at .

(1) The TFGI is calculated by multiplying the projected growth rate of future IT budgets by the average percentage of respondents saying they plan to increase spending on eight unique categories: computer hardware, data networking equipment, telecom equipment, storage systems, outsourced IT services, infrastructure software, and eBusiness software.

(2) Averages exclude responses over 100%.