January 13, 2015 —Arlington, Massachusetts

Like last year, the largest group of respondents to our annual IT Budgeting survey reported a growing IT budget (46%). But the percentage of organizations reporting budget decreases increased (30% from 24%), driven by business demand for decreased costs (43%), retirement of applications/infrastructure (32%), and hardware consolidation (30%).

This led author Dennis Adams to wonder whether we're entering a period of slowed growth for IT budgets. "Satisfying pent-up demand for IT services may explain this change; however, so too might the unease with political, security, and economic issues across the globe." Adams continued, "While the survey was live, people all around the world were watching beheadings by terrorists, discovering an increasing number of major hacking incidents of credit, and witnessing gridlocked governments around the issues of border security, healthcare, and budgets. Corporate budgets are not created in isolation but rather are a reflection of the world in which we live. I believe we will continue to see increasingly conservative budgets in the near future as the stock markets become ever more concerned about world events."

What should a wise manager do in creating budgets? According to Dennis, "Not only should the wise manager focus on issues that affect price or the cost of goods sold, but also those externalities that affect the health of an industry: adequate labor pools, the global economy, and the security of a safe business environment. In creating an annual budget, the wise manager takes into consideration the cost management strategies that are successful in the long and short run. You know the old adage, "It takes money to make money"? Well, the wise manager says, 'It takes money to save money.'"

* Excerpted from "IT Budgets: Getting Ready for the Slowdown," () Cutter Benchmark Review, Vol. 14, No. 3