The magnitude of the economic crisis is unprecedented since the advent of the digital computer, and its impact is felt at a time when IT represents one of the most pervasive and important resources of modern organizations."

— Gabriele Piccoli, Editor

This month's installment of Cutter Benchmark Review is the fourth in our yearly series on IT budgets and the budgeting process. The budgeting process is of critical importance to the IT and business professionals in our readership. That last statement may have never ringed as true as it does today in the midst of the greatest economic upheaval we have witnessed, perhaps in our lifetime. As you get ready to read and evaluate the results of the survey to make sense of what we've uncovered, you need to bear in mind that the data gathered in this survey was collected during the worst economic climate in the modern computer era. Contextual and environmental events of this magnitude have an impact that is felt throughout a benchmarking survey of this kind, beginning with a very low response rate as the belt tightens and IT professionals around the world find themselves working harder, and on more responsibilities, than ever before.

The magnitude of the economic crisis is unprecedented since the advent of the digital computer, and its impact is felt at a time when IT represents one of the most pervasive and important resources of modern organizations. Thus, we can learn a lot about how firms react (and should react) to these kinds of events. In fact, spurred by the findings of this survey, we are conceptualizing a benchmarking study on how to manage IT through a crisis. As I write this, though, there is increasing hope that the worst of this economic and financial storm is behind us. Recently, for example, the US Federal Reserve announced that the worst of the recession should be over — quickly pointing out, however, that the economy will remain weak for some time to come. A few weeks before then the European Central Bank also offered a similar cautiously positive outlook.

The typical reaction during times like this is for organizations to drastically cut back on spending and hunker down to ride out the storm. Yet there is some evidence that this storm may be playing out somewhat differently for IT professionals than times of previous budget cuts as savvy executives know that IT resources will be a critical element of the firm's ability to recover quickly once the recession is over.

Our contributors analyze the results with an eye to year-over-year considerations. These long-term trends are possible because this is the fourth data point that we have collected in the IT budgeting survey. As faithful readers of CBR already know, this cyclical benchmarking that enables trending is the role of our yearly surveys — the one on budgeting that we publish in midyear and the one on IT trends and technologies to watch for after the new year in January.

As you will see in this issue of CBR, our contributors were able to continue drawing on and expanding on last year's trends. We certainly know that four data points, while beginning to provide good information, are not quite enough for serious trend analyses. Yet our contributors are able to draw important insights on budget size and priorities.

In order to provide consistency with respect to the responses we seek, our contributors have identified a core set of survey questions we continue to ask each year. As always, these are the issues that we feel you, our readers, would have inquired about. Recognizing that we will have fluctuations in importance of topics over time, some of the survey questions do change each year. This approach enables us to identify trends around the core set of issues while still being flexible with respect to the relevance of each survey item.

Further, to capitalize on the year-over-year trending ability our data affords us, we have kept the team on this yearly issue intact. Our academic contributor is Dennis Adams, Associate Professor in the Decision and Information Sciences department at the University of Houston (USA). Those of you who follow CBR already know Dennis, as he is also the academic contributor for our annual issue on IT trends and he has participated in a number of other installments of CBR. Providing our view from the field is another team very well known to Cutter clients: Bob Benson and Tom Bugnitz, Senior Consultants with Cutter Consortium's Business-IT Strategies practice and members of the Beta Group.

Dennis begins his contribution by contextualizing the IT budgeting process in this year's roller-coaster economic ride, helping us take a step back to provide an overview of recent economic events shaping this year's budget decisions. With this as a background, Dennis dives into the survey data, drawing conclusions and comparisons to what we saw in previous surveys. He then concludes with a section entitled "The Way Forward," which I think you will find enlightening and somewhat heartening.

Bob and Tom bring their years of consulting, writing, and educational experience to bear in their commentary on the survey results and their interpretation of the trends. Bob and Tom systematically address the key aspects of the survey, with interesting charts that leverage the data over time. As always, what I see as most valuable in their analysis is their ability to intersperse their evaluations of the survey results with knowledge and suggestions from their many years of combined experience, articles, and books.

While commentators often suggest that the IT budgeting process is (or at least should be) a very rational process, this is often not the case in real-world organizations. This is even more apparent when shock waves of the magnitude of this past year ripple through the system. Thus, keeping with the tradition of CBR, our objective is not only to benchmark what is happening in order to give you some comparison data to evaluate your own organization, but also to provide practical guidance and food for thought as you define the optimal budget and priorities for your own firm. I think you will find this issue of CBR to have hit the mark despite the limited response rate on the survey.