For insurers, operational budgets this year for information technology are up 1.7 percent in the United States and Canada, lagging the 2.2 percent median rate. This improvement is accompanied by declining confidence among CIOs in their budget plans, according to Computer Economics Inc.’s “IT Spending and Staffing Benchmarks 2012/2013” survey. Last year, the aggregate median rate of spending increases was 2 percent.

"The modest recovery in IT spending we saw last year is continuing, but it is far from robust," said Frank Scavo, president of the Irvine, Calif.-based IT research firm. "Hiring remains weak and smaller companies are still not showing as much strength as we would expect in an economic recovery."

The survey of IT spending and staffing plans for 200 IT organizations in North America, including 17 insurance companies, found that while IT spending is trending upward, almost one-third (31 percent) of CIOs anticipate reducing their spending plans before year-end. Last year this negative indicator was only 23 percent, signaling that the IT spending recovery is losing momentum.

"The IT spending recovery appears to be stuck in the early stage," Scavo said. "If we saw more growth in the budgets of smaller organizations, we would have more confidence that the rate of improvement was accelerating."

The study also found that IT operational spending is improving faster at larger companies than smaller ones; process manufacturers and wholesale distributors are showing healthier growth than other sectors; for capital spending, the median was a 2 percent increase, compared with 1.8 percent last year; for CIOs, the highest priority is on upgrading existing systems and improving cost efficiency, which outranked developing new systems and upgrading infrastructure. Hiring shows some improvement, with 40 percent planning to increase IT staff headcount. Health care providers, wholesale distribution and high tech showed the most improvement. However, across sectors the median IT staff headcount remained unchanged from last year.

The Computer Economics “IT Spending and Staffing Benchmarks 2012/2013” is in its 23rd year of publication and offers key metrics to assist organizations in the financial and strategic management of information technology. Respondents include executives in the public and private sectors.

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