IT Industry Outlook for 2011 – Budgets and Salaries

Funding for IT budgets—including allocations for salary increases—will go up next year, but cost cutting is still a major concern. Business intelligence—despite its expense and effort—continues to be a No. 1 technology investment priority in 2010.

IT workers, listen up: Management is budgeting for raises next year.

These raises, however, come with an expectation for technology to be a strategic cost-cutting and simultaneous revenue-producing investment. Business intelligence—despite its expense and effort—continues to be the No. 1 technology investment of 2010.

In exact terms, 61 percent of executives are planning to give technology worker salaries a boost in 2011. Only a third of employers will be keeping salaries flat. The silver lining is less than 10 percent will be chopping salaries next year, according to annual data compiled by SIM (Society for Information Management), which surveyed more than 172 companies.

Of most concern to executives such as CIOs and senior IT managers is business productivity coupled with cost reduction. Other major concerns include speed to market, business agility, business and IT alignment and the reliability and efficiency of IT practices.

“The No. 1 response is getting more revenue from IT investments as in leveraging IT to reduce business costs,” said Jerry Luftman, professor of information systems at Stevens Institute of Technology, in an interview with eWEEK. “It is also clear that the trend for offshore outsourcing is expected to continue to rise.”

Luftman is a former SIM executive vice president who will be presenting the survey results to SIM attendees Oct. 3 at its annual conference in Atlanta. Luftman has been producing the research for this report for the last 10 years.

For IT budgets, 38 percent of executives are increasing them next year, 27 percent are decreasing them and 35 percent are keeping them flat. Compared to last year, there is an 11 percent increase in budget spending—a good sign for projects and resources that have been on hold or postponed.

Many executives are looking for IT to lead the way in business process re-engineering, in strategic planning and keeping data and intellectual property secure. Making the list of concerns for the first time, however, was globalization.

The No. 1 technology investment for these 172 organizations is BI (business intelligence). According to Luftman, BI has been the top technology investment for the last three years despite a recession and challenges for many with effective BI implementation. Given the emphasis on cost reduction, how is it that business intelligence ranks above virtualization, ERP (Enterprise Resource Planning), continuity planning/disaster recovery and cloud computing?

“I am surprised too that it remains so high other than they recognize its importance but are still struggling to implement it,” Luftman said.

Cloud computing made the top five technology investments for the first time in this year’s SIM report, further confirming its ascendancy as companies look to reduce costs in areas across the landscape of cloud-based services. Another trend that continues to be taken advantage of is offshore outsourcing, which will see an increase of 2 percent, from 5 percent in 2010 to 7 percent in 2011 IT budgets, according to the SIM report.

IT turnover rates were low in 2010, according to the study. Seventy-one percent of SIM survey participants saw less than 5 percent of IT workers leave their company. Nearly 16 percent saw 6 to 10 percent turnover. The average rate of turnover was about 5.5 percent for 2010; last year, that rate was 6.9 percent.

“The insights from the study confirm that the economic downturn is continuing to cause a significant shift in IT priorities,” said Luftman in a SIM statement. “It is essential to recognize how organizations are leveraging IT during this prolonged economic conundrum, as well as preparing for when the economy will improve.”

Another thing Luftman noted is that as the economy improves, many people are expected to hit the retirement ranks, though he expects to see a larger hiring pool next year.

Courtesy: Don Sears, eWeek.com

Capgemini acquires German IT services firm CS Consulting GmbH

Capgemini, a global leader in consulting, technology and outsourcing services, has announced the acquisition of German information technology services provider CS Consulting GmbH from its previous owner LRPC, a fund managed by Süd Beteiligungen, a private equity arm of Landesbank Baden-Württemberg, founder Berndt Blumenthal and Dr. Kurt Rommel. The agreement was signed yesterday under conditional approval by the relevant anti-trust authorities. The acquisition will more than double Capgemini's market share in IT services for banking clients in Germany.

CS Consulting is an IT consulting firm that specializes in the banking and insurance industry. Founded in 1984, the firm has consistently chalked profitable growth above the market average. In 2009, it generated EUR 47.4m in revenue.

CS Consulting employs more than 400 experienced consultants and specializes in migration of core banking systems and business intelligence systems implementation. It is a leader in IT consulting and system integration in Germany, known for its innovative solutions and ability to develop complex applications for its clients in the banking sector.

Olivier Sevillia, Member of Capgemini Group Executive Committee, said, "The service portfolio and company culture of CS Consulting, which focuses on reliability of services, independence in terms of consulting and strong collaborative client approach, fit perfectly with Capgemini. With this step, we are giving a clear signal for the further growth of our business in Germany."

Berndt Blumenthal, CEO of CS Consulting, said, "Joining Capgemini will enable us to benefit from the experience of a truly international Group with a solid delivery network, and to offer promising perspectives to our employees. We will combine our strengths to serve German banks expansion and transformation."

Vault 2011 prestige rankings: Top consulting firms

Employment and careers portal Vault.com released the 2011 prestige rankings for consulting firms - The Vault Consulting 50 - in late August in an attempt to determine the best consulting companies to work for.

The rankings were determined by a formula that factored in the results of Vault's Management and Strategy Consulting Survey, conducted annually between March and July. More than 4,500 consultants were asked to rate the prestige of their peer consulting firms on a scale of 1 to 10 as well as their own firm's quality of life.

"We went out and asked consultants what mattered most to them in choosing an employer and prestige, while important, was not the biggest determining factor," said Brian Dalton, managing editor at Vault.com. "According to consultants, company culture was the most important factor, followed by practice strength, prestige and compensation, along with several other factors."

The Top 10 Firms from the Vault Consulting 50 Rankings for 2011 are:

1. Bain & Company
2. The Boston Consulting Group
3. McKinsey & Company
4. Analysis Group
5. The Cambridge Group
6. Deloitte Consulting
7. Oliver Wyman
8. A.T. Kearney
9. Triage Consulting Group
10. Censeo Consulting Group

Respondents note that Bain "set the bar (with McKinsey) in terms of prestige” and noted that the firm was “great for management consulting."

In terms of quality of life, one strategy consultant at Bain & Company said of the firm: "There is no other company I’ve seen in my 10 years of professional experience with a stronger, healthier culture." A Toronto staffer added, "It is a demanding career, but yes, I have been able to live a very rewarding personal life over my last 10-plus years at Bain."

Boston Consulting Group also received high praise. Said one health care consultant: "BCG is a fantastic place to work. They go the extra mile to invest in their consultants. The work is interesting, the people are brilliant, and the compensation and benefits are second to none."

Other smaller, more niche firms that were recognized for their quality of life, include Analysis Group (No. 4), The Cambridge Group (No. 5), Triage Consulting Group (No. 9), Censeo Consulting Group (No. 10), and West Monroe Partners (No. 11).

As an example of why these smaller niche firms are succeeding, one senior consultant at The Cambridge Group said, "I feel very lucky to have found TCG. I am constantly challenged and enjoy the work and the people. As a testament to the great experience I have had, I'm the only one of my friends from business school who has not switched companies since leaving school."

According to Mr. Dalton, more jobseekers are discovering the benefits of joining these niche consulting companies. "These firms often get overlooked in the prestige rankings in favor of the more well-known firms," he said, "but they shine in the quality of life areas that many consultants care most about, leading to some deserved recognition in our Vault Consulting 50 Rankings."

"Bain & Company, and Boston Consulting Group for that matter, historically dominates many of our quality of life categories, in addition to carrying a lofty reputation in the industry," added Dalton. "McKinsey, which is perennially the most prestigious firm, slips due to lower firm culture and work/life balance scores areas - where smaller firms tend to have the advantage."

View the entire Vault Consulting 50 Rankings for 2011.