Gartner EXP Survey Shows CIOs Are Cautiously Optimistic Regarding Increased IT Spending in 2004; Global Survey Shows How CIOs are Preparing for the Upswing.

Business Editors

STAMFORD, Conn.--(BUSINESS WIRE)--March 9, 2004

CIOs are confident there will be increases in IT spending in 2004, but they don't intend to boost spending until there is a business recovery, according to a survey of leading CIOs conducted by Gartner Executive Programs (EXP), a unit of Gartner, Inc.

Gartner EXP surveyed 956 CIOs from organizations around the world, making this the most comprehensive study of CIO behaviors and beliefs.

Signs of a business recovery are forming, and CIOs are anticipating an IT spending increase of 1.4 percent in 2004. More than 40 percent of those surveyed believe this increase will occur in the second half of 2004.

"CIOs are being very conservative, laying down the foundations for growth, but not aggressively pushing for it," said Marcus Blosch, vice president and research director for Gartner EXP. "Having weathered the storm of declining budgets and increased management expectations, most CIOs expect to focus on improving the contribution IT makes to the growth of their organization, while still keeping a control on costs."

Business priorities for CIOs remain focused on security breaches, operating costs and data protection/privacy. Outsourcing is a key initiative for many companies; however, business process outsourcing (BPO) is a significant blind spot for CIOs. Two-thirds of CIOs do not see BPO as important either now or through 2007. Gartner EXP analysts said in many cases CIOs are not included in BPO decisions, and many suppliers go directly to business unit executives.

"BPO is not just a business process decision," said Mark McDonald, group vice president for Gartner EXP. "CIOs need to be more engaged in these discussions as outsourcing business processes often involve outsourcing the supporting technologies."

The bulk of a CIO's activity must be aligned with a specific enterprise's stage of development. As a result, a CIO's priorities, behavior and effectiveness are dictated to a large degree by various company-specific factors. Gartner EXP has categorized three types of environments that collectively describe what most CIOs' are managing in this year. These three types include "maintaining competitiveness," "fighters" and "breakaways."

The survey showed 69 percent of CIOs are in enterprises that are "maintaining competitiveness." In these companies, CIOs are attempting to balance effectiveness, efficiency, cost management, and operational integrity.

Fifteen percent of the CIOs are in enterprises that are "fighting for survival." These CIOs are more efficiency focused, devoting more of their budget and attention to cost disciplines.

The environment that CIOs strive for is the "breakaways." Sixteen percent of CIOs surveyed are in "breakaway" enterprises. CIOs in these companies are seen as business leaders and focus more on effectiveness, growth and agility.

"CIOs in a 'breakaway' segment work hard at gaining the trust and respect of the CEO and senior business colleagues, giving them greater scope to operate," Blosch said. "They use their increased scope to be more proactive, aligning themselves more tightly with the business. As a result, breakaway CIOs deliver more to business needs and make a bigger contribution to the superior performance of the breakaway enterprise."

Three trends will shape the CIO agenda in 2004, according to survey results. CIOs who understand these trends will know how to make the right strategic and technical decisions now and for the future. These trends include:

-- Businesses are more interconnected and electronic than before.

-- Information systems capabilities are influencing core business

capabilities.

-- Trust and time with executive peers drive CIO credibility.

"From 2001 to 2003, the watchword was "do more with less." In 2004, the watchword is changing to "earn as you go." CIOs who deliver business results will create a virtuous circle where they garner more resources and executive attention," McDonald said.

Additional information is available in the Gartner EXP 2004 CIO Agenda report. This is the largest survey of its kind. Industry sectors represented include: government, financial services, manufacturing, utilities, communications, retail, healthcare, education and transportation.

About Gartner EXP

Gartner Executive Programs (EXP) is a membership-based organization of more than 1,900 CIOs worldwide. Members benefit from the convenience of a single source of knowledge, one-to-one counsel, personalized service, the shared knowledge of the world's largest community of CIOs and the assurance of Gartner objectivity and insight. Additional information about Gartner EXP can be found on the Gartner Web site at http://www.gartner.com/exp.

About Gartner

Gartner, Inc. (NYSE: IT and ITB) is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 10,000 clients, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Gartner Intelligence, research and events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has 3,700 associates, including more than 1,000 research analysts

and consultants, in more than 75 locations worldwide. For more information, visit www.gartner.com.