The results of the latest Merrill Lynch survey into CIO spending shows a decline in spending going into 2006. The survey report states, “The percentage of CIO’s indicating an increase in IT spending declined versus our two prior surveys indicating a tone of caution going into 2006. 57% of CIO’s indicated that 2006 IT budgets are expected to be flat to down. This is the highest level of flat to down spending indicated in our five surveys going back to August 04.”

The area with the top spending priority was business intelligence and data warehousing (41% of CIOs). Second in priority was security (36% of CIOs). Other interesting points from the survey include:

* ERP, security and desktop operating systems showed a significant increase in spending priorities in 2006, while application integration, portals and supply chain management showed a decline.

* Microsoft continues to strengthen in middleware and systems management buying intentions. It was also noticeable that Microsoft received high purchase decision ratings in other areas including business intelligence, analytical applications and content management. In the database area, Microsoft is gaining ground, but Oracle is still number 1.

* There is an upward movement in Oracle and Salesforce.com application spending.

* On demand application spending intentions are up and are being led by Salesforce.com.

* Linux is gaining traction with Red Hat continuing to strengthen its number 1 position.

Thanks to Ed Maguire for sending me a copy of the report.