CIOs Face IT Spending Squeeze, Security Woes, Higher Expectations in 2023

CIOs are headed into a challenging year in 2023 as top executives expect a faster time to value on projects while IT spending is squeezed by inflation. At the same time, CIOs remained very focused on cybersecurity as the threat landscape continues to worsen.

Those were among some of the highlights of the Gartner IT Symposium/Xpo in Orlando this month. Here’s a breakdown:

• While CIOs expect IT budgets to increase by 5.1% on average in 2023, that’s lower than the projected 6.5% inflation rate
• CIOs continue to say their big priority is operational excellence
• Top executives are looking for an acceleration of time to value on projects

“Top executives want to see the money, whether that’s top line or bottom line,” Gartner CIO Research Chief Janelle Hill tells InformationWeek. “Given the times with inflation, with a potential recession coming, with all the problems in the world, we are saying your executives are running out of patience. Basically, it’s time now to show them the money.”

Gartner based its findings on a survey of 2,203 CIOs in 81 countries spanning all major industries and representing $322 billion in IT spending.

CIOs ranked their executives’ objectives for digital technology investment over the last 2 years. The top two objectives were to improve operational excellence (53%) and improve customer or citizen experience (45%). Growing revenue was cited by 27% as a primary objective and 22% cited improving cost efficiency.

Top Areas for Increased Investment

CIOs said their top areas of increased investment for 2023 included cyber and information security (66%), business intelligence/data analytics (55%), and cloud platforms (50%). Lower down were 32% for increasing investment in artificial intelligence (AI) and 24% for hyperautomation.

Disconnect with Boards of Directors?

Those low numbers for AI and automation may indicate a bit of a disconnect between CIOs and boards of directors. According to a separate Gartner survey of 281 members of boards of directors, the top investment areas to drive digital business and enterprise success were AI and machine learning (ML) at 40%, software enhancement at 30%, and data and analytics at 28%.

Actually, today’s boards have shifted and are now looking to CEOs to lead digital business initiatives rather than looking to CIOs for that, Gartner VP Jorge Lopez tells InformationWeek. The survey found 28% looking to CEOs versus 19% looking to CTOs, and just 14% looking to CIOs as the drivers for digital business initiatives within the enterprise.

“It’s actually a major, major shift,” Lopez says. Because digital transformation requires technology, it may have been thrown to the CIO. But digital transformation is actually about business and should be led by the CEO.

In digital business, there’s optimization and then there’s transformation, he explains. CIOs have tended to favor optimization.

“Optimization can be a more comfortable spot to be in because they think that if I improve my operations, I’m more competitive,” Lopez says. “In retail that proved to be a disaster. Companies like Toys R Us were paralyzed by the rise of Amazon and never quite figured out what to do and so they kept trying to optimize what they were doing when in fact what they should have been thinking about was how do we transform so that we can build a business for a world that maybe is dominated by Amazon.”

Target, however, found a way forward, according to Lopez.

“Target answered the ecommerce side of Amazon but also established brands within their operations that gave them a way to differentiate themselves from someone who would normally go to Amazon to buy things.”

The Budget Squeeze

“I have never met a CIO who says ‘I’ve got plenty of money, plenty of people, plenty of resources.’ They always feel they are short,” says Hill.

She recommends that CIOs and IT leaders prioritize what to spend on and what to pause. They can also optimize their spending by reducing costs using technologies such as automation or augmentation.

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