We can use budgets as an indicator of aggregate organizational sentiment of what the firm’s leadership perceives is going to happen."

-- Gabriele Piccoli, Editor

This month's installment of Cutter Benchmark Review is our fifth in the yearly series on IT budgets and the budgeting process. The budgeting process is of critical importance to the IT and business professionals in our subscriber base. Moreover, budgets represent plans for investing resources in the areas that the organization's leadership deems most critical to its success. Budgets are based on explicit or implicit forecasts of what is going to happen. Thus, we can use budgets as an indicator of aggregate organizational sentiment of what the firm's leadership perceives is going to happen.

In these five years of charting IT budgets and the budgeting process, we have documented the roller-coaster ride that IT shops around the globe have been on as things went from good times to perhaps the greatest economic crisis ever to strike the global economy to now slowly and gingerly climbing back out of the recession. Because we have been able to keep our team of experts intact and to maintain the core set of survey questions we ask of the respondents, we have learned quite a bit about the manner in which modern organizations react (and should react) to these kinds of events. We have learned, for example that the knee-jerk reaction typical of past crises whereby the firm would slash IT budgets seeking to "trim the fat" and "reduce overhead" wasn't exactly the case. In last year's survey, we found that "while organizations are indeed cutting projects and limiting their exposure by reducing investments in IT, they are also limiting reductions in the IT shop as much as possible knowing that IT assets and knowledge lost during a downturn cannot be readily rebuilt and scaled once the economy turns. As a consequence, the shape that this downturn has been taking for IT and IT professionals is likely different than the historical pattern of deep cost-cutting measures."

This fifth survey came at a time when the recovery was widely believed to be underway. It thus enables us to investigate how firms are allocating resources as they claw back from the global crisis. The value of maintaining both our team of experts and the core set of survey questions is proven more and more each year as our contributors are able to analyze the results and comment on year-over-year considerations. As faithful readers of CBR already know, this cyclical benchmarking that enables trending is the role of our yearly surveys: both the one on budgeting that we publish midyear and the one on IT trends and technologies that we issue in January.

As you will see in this issue, our contributors were able to continue drawing on and expanding on last year's trends. With five data points to draw from, interesting patterns are beginning to emerge, some very unsurprising while others less expected. The core set of survey questions we continue to ask is complemented each year with a few new additions that we feel you, our readers, would have inquired about. This approach enables us to identify trends around the main set of issues while still being flexible with respect to the relevance of each survey item.

Our academic contributor on our returning team of experts is Dennis Adams, Associate Professor in the Department of Decision and Information Sciences in the C.T. Bauer College of Business 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 on a number of other installments of CBR. Returning to provide our view from the field is a practitioner very well known to Cutter Consortium clients: Bob Benson, Fellow with Cutter Consortium's Business-IT Strategies and Government & Public Sector practices and a Principal with The Beta Group.

Dennis follows his standard format and begins his contribution by contextualizing the IT budgeting process, thus 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 call for a relentless focus on IT-enabled innovation, suggesting that as we come out of a recession the time is right for using IT to change the way we do business rather than just managing cost.

Bob brings his years of consulting, writing, and educational experience to bear in his commentary on survey results and interpretation of trends. He systematically addresses the key aspects of the survey, with compelling charts that leverage the data over time. As with every year, what I see most valuable in Bob's analysis is his ability to intersperse evaluations of the survey results with knowledge and suggestions gained from his many years of combined experience, articles, and books.

I think you will find this to be the most valuable issue of the IT budgeting series yet, not only providing direction and guidance based on this year's data, but bringing to fruition five years of trending.