IT spending reality check: 2014's mixed message

Tech budgets and hiring are down from earlier optimistic projections, but IT's confidence is holding steady.

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IT holding its own as 2014 winds down

How is 2014 shaping up for IT spending, hiring and overall success? While a third-quarter reality check shows a dip in both IT budgets and hiring forecasts, tech leaders and industry watchers say IT is still on track in leveraging technology trends to meet business needs.

In comparing data from September 2013, when IT leaders were asked to project their spending, hiring, talent needs and technology priorities for 2014, with a similar survey conducted this September, it appears IT is holding its own as 2014 progresses.

Even if budgets remain stalled, IT leaders are confident in their ability to satisfy business demands, indicating a tighter alignment between the two groups, says Jason Hayman, research manager for TEKsystems, which conducts the quarterly checks of IT spending. "IT may not have all the money or people it needs, but at the end of the day, tech leaders have a good grasp of the IT trends that most impact their organizations" -- particularly mobile, security, cloud and big data/business intelligence, Hayman says.

Read on for additional data from the reality-check survey, plus reaction from IT leaders in key vertical markets.

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Budget increases stall

Heading into 2014, 62% of IT leaders surveyed for TEKsystems' Annual IT Forecast expected to have more budget to put towards projects and people, while 26% anticipated that their spending would remain flat.

The third-quarter reality check -- which represents the views of more than 200 IT leaders, including CTOs, IT vice presidents, IT directors and IT managers -- reveals that budget increases are turning out to be less than what was initially projected. Now, only 46% of IT leaders surveyed are reporting higher spending, while 39% expect budgets to remain unchanged.

At GE Digital Energy, the 2014 IT budget was up slightly over 2013, and at the close of the third quarter, spending remains on track. "We are still on target to deliver this year's IT programs for the business," notes Venki Rao, the division's CIO. Specifically, the firm is investing in systems that enable pricing, requests for quotes, proposals and competitive intelligence. "We are trying to give [salespeople] everything they need to act while they are still with the customer," Rao says.

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IT still able to satisfy

A tighter grip on technology spending might be suppressing IT's ability to satisfy the business, but overall, confidence levels are still high.

Looking forward to 2014 in September of last year, 66% of IT leaders expressed confidence in their department's ability to meet the demands of business. At the end of the third quarter 2014, that number was 69%, up slightly from the 2013 forecast, but down significantly from a mid-2014 confidence level of 73%.

That dip is likely due to the normal cycle of business as the fiscal year progresses, says TEKsystems' Hayman. As both IT and business units begin planning for next year, "you naturally tend to go into your silo," which can temporarily narrow the lines of communication, he says.

Overall, a 69% confidence level is very good, Hayman observes, saying that number is ongoing evidence that IT is succeeding in aligning its goals and objectives with business needs more than it has in the past.

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Calling all project managers

Finding exceptional talent is an ongoing challenge. As 2014 moves toward a close, project managers are the IT employees most in demand, but it wasn't always that way. They were the No. 5 most difficult hire at the end of 2013, dropped to No. 10 at end of March 2014 and climbed to No. 5 at the end of June before claiming the No. 1 slot at end of September.

By contrast, two other skill sets -- developers and architects -- remained consistently among the top five most difficult positions to fill for the first three quarters of 2014. By the same measure, help desk/technical support, cloud and social media have consistently been ranked by survey respondents as the least difficult roles to fill.

Aside from project managers, the positions that fluctuated the most in terms of difficulty of finding exceptional talent were software engineers and business intelligence/big data experts.

EFG Companies, which provides financial protection and consumer-engagement solutions in the automotive space, continues to seek out new hires with expertise in Microsoft Business Intelligence tools and .Net programming, says Barry Carter, the company's COO and CFO.

"Business is growing due to increased new and used car sales, and that is allowing us to expedite an effort to reshape our technology platforms to eliminate a lot of manual processes," Carter explains. "Having access to BI specialists and programmers fluent in Microsoft technologies is critical to our ability to effectively build these new systems."

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Mobile, security, cloud continue to dominate

The momentum behind big trends like mobility, security, cloud computing and business intelligence shows no signs of slowing down. While the technologies traded spots over the first three quarters of of 2014, they have all remained among the top five technologies cited by TEKsystems' survey respondents as having the greatest impact on an organization.

Consumerization of IT/Bring your own device (BYOD) was the biggest gainer over the three quarters, up 3 notches, while data center consolidation dropped the most, down four in the rankings.

Mobility closed out 2013 in the No. 3 position, but by the end of September 2014 had gained the top slot. At Learning Ally, a nonprofit providing audio books and services for those with learning disabilities, mobile is a big area of investment, as is an infrastructure revitalization project, says Cynthia Hamburger, Learning Ally's CIO and COO.

"We have a lot of layers of legacy built up over the years. We're removing layers and simplifying infrastructure so we can be more flexible going forward," Hamburger says. With customers hungry for a mobile experience, Learning Ally needs to design new mobile app offerings and retool existing infrastructure to support mobile access.

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IT is a full-time job

While many organizations continue to leverage outsourcing as a strategy to shore up limited IT staff, the number of traditional full-time employees still dominates over contingent workers. According to the TEKsystems' research, the makeup of IT departments has changed little from the beginning of the year, with 76% full-time employees and 24% on board as temporary workers.

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Hiring projections off for both full-time, temp employees

While 47% of IT leaders surveyed expected increases in full-time hires at the onset of 2014, only 38% now expect to do so by the end of the year. And while 46% of companies expected as they were heading into 2014 to ramp up hiring of temporary employees, just 24% say they now plan to increase contingent IT workers through the end of 2014.

"In a perfect world, when fewer folks say they're going to increase hiring, it's because IT is running at optimal efficiency at the staff levels they have now," says TEKsystems' Hayman. More realistically, the lower projections are likely a function of the year winding down and attention turning to 2015. "Budget dollars are starting to be exhausted. You're not going to start big new projects or ramp up a large number of staff at year's end," Hayman points out.

Additional reporting by Tracy Mayor.

Copyright © 2014 IDG Communications, Inc.