Tight budgets will hit IT departments in 2011

Budget constraints will be the biggest challenge for IT managers in 2011 as UK companies are forced to cut costs and reduce the size of their IT departments.

According to a survey of 22,000 UK IT managers by Frontier Technology, 59% said budget was the biggest IT challenge in 2010, while 66% said it was the greatest issue for the coming year.

As a result, a quarter of IT, business continuity and senior managers surveyed said they would be reducing the size of the IT department throughout the year.

Edwin Wong, managing director at Frontier Technology, warned a drive for cost reduction over efficiency threatens to corrode organisations' competitive advantage.

"Regardless of the economy, IT requirements do not change. When firms cut IT projects company-wide productivity will fall, resulting in the organisation losing their competitive advantage and profits," said Wong.

"It is surprising to see that back-up routines, security and disaster recovery - the most IT critical services, were those flagged as the least efficient in UK firms," he added.

Wong said it is essential for critical IT services to be fail-proof. "A breach of security, lost files or a business disaster could prove catastrophic, not only to a organisations data and applications but also to their reputation," said Wong.

The survey also revealed 22% of IT managers plan to implement cloud computing this year to drive down costs.

A Gartner report released today reported that CIO budgets will be flat in 2011, with an average increase of 1%.