CedarCrestone recently updated their annual HRIT survey covering the trends in HR budgets. It’s especially interesting right now as the economy swings down. There is obviously much more content and charts in the real report you can get from CedarCrestone, but here’s a quick summary and my comments.
During December 2008, CedarCrestone conducted its first “PULSE” survey of 828 respondents to our 11th annual survey to determine if budgets for HR technologies are changing due to the economy. The annual survey ran between June and August 2008, prior to the dramatic downturn in the final quarter of 2008. For this CedarCrestone PULSE, 20% of original respondents participated. A surprising 70% of respondents reported no change in HR systems budgets. This large percentage is surprising in light of the daily gloomy economic reports. Are respondents maintaining their current HR systems strategies or was senior management waiting until after the holidays to make budget changes?
Of the 30% reporting a change, on average 11% report an increase and 19% report a decrease. The average increase is in the 1–5% range. The average decrease is in the 6–10% range. The net change averages -6%. The smallest net decrease (-4%) across the application categories we track is for the talent management applications. Those with plans for business intelligence applications are the smallest percentage reporting a decrease (15%). Three industries had a positive net: Consumer manufacturing (2%), higher education and public sector (each at 1%).
Most of us won’t at all be surprised at a slight trend to smaller HRIT budgets. I think what is going on here is that the operational budgets of running HRIT are intact. There are normal activities and staff that are needed to keep the systems running. Implementations and upgrades that are in progress have already been funded and will generally stay in progress.
Where I would anticipate some lowering of budgets are in the new discretionary strategy projects. These are expensive and if not in progress already, these are the type of projects organizations have lived without for years and a few more months won’t hurt. While I don’t necessarily agree with this thinking, certainly it’s better to not being new projects than to stop projects in mid-stream.