CIOs of foreign companies are being advised to reasses their technology product budgets in light of the continuing strength of the U.S. dollar in relation to other currencies.

The warning comes in a new report from Gartner Inc., which notes that currencies including the Euro, Japanese Yen and Brazilian Real have all lost at least 20 percent against the U.S. dollar in the last 12 months. As a result, the cost of technology for foreign companies is going up, and Roberto Sacco, research director at Gartner, warns the dollar will continue to gain in relation to other currencies until the end of 2016 at least.

Sacco says CIOs need to assume that the cost of U.S.-made technology products will rise correspondingly, and so they should take this into account when preparing their budgets.

“As the CIO, the most important action is to review your project plans through the second quarter of 2016,” Sacco said. “Assume there will be a 20 per cent Euro price increase on Dollar-based IT products, and then make a plan to deal with it.”

Sacco says that all U.S. products, including software, services and even cloud services, will become more expensive over the next year. He says that manufacturers, many of whom have already blamed the strong dollar for their poor financial performance since the beginning of this year, won’t want to lose out, and so there’ll be no negotiating on prices.

“Suppliers are currently repricing in local currencies,” Sacco said. “In an attempt to obfuscate this, they are also re-bundling — changing the mix of included modules, such as training and installation assistance.”

Many foreign firms probably haven’t been affected by the price increases yet, but they’re likely to do so as soon as their contracts come up for renewal. And it won’t just be U.S. suppliers who’re raising their prices, because European software providers will likely do the same to maintain market rates in areas where they’re not trying to compete.

Sacco says that CIOs must therefore work out their priorities and design a budget taking into account the coming cost increases.

“See where you can minimize the impact of these changes, look for other opportunities to cut costs, and identify the risks, opportunities and funding that the plan exposes,” Sacco advised. “Validate the plan with stakeholders, then work with the CFO to close any remaining gaps.”

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