After a long period of recession, spending on business technology is now on the rise. Signs of economic recovery and a more stable operating climate have caused companies to shed their cautious approaches and spend more on IT in 2014.
The Gartner research firm expects worldwide IT spending to reach $3.7 trillion in 2014, up 2.1% from 2013. Another positive trend involves the estimations of chief information officers. According to the latest poll from CIO magazine, 47% of CIOs expect their IT budgets to grow. The poll found that overall IT spending was anticipated to increase by about 5%.
Likewise, the advisory company CEB’s IT Budget Benchmark survey indicated a median growth of 3.3% in worldwide IT spending for 2015. This is the highest growth rate in 5 years.
Moreover, as new opportunities emerge, many companies will be expanding their IT spending throughout the year. CEB expects the actual growth to be closer to 5%, in line with CIO’s estimate.
In a similar survey of global IT professionals by Tech Pro Research, 4 out of 5 respondents indicated that their IT budgets for 2015 would be equal to or higher than the 2014 level. Nearly half reported that it would be slightly or significantly higher.
But what is particularly noteworthy is how companies are spending their budgets. The growth in technology expenditure shows that IT is now being seen as equal to, or more important than, other business units.
Changing IT Priorities
The IT focus of many companies is shifting from tactical and operational issues to strategic and organisational priorities. More businesses are investing in technology to support growth opportunities and improve efficiency.
This results in a more strategic and business-focused IT strategy. According to a joint publication from TechRepublic and ZDNET, 68% of companies said that their IT departments were contributing more to accomplishing business objectives than they were three years ago.
In the survey by Tech Pro Research, almost two-thirds of respondents said that improving efficiency and business processes was a major priority. Productivity was another big issue. Nine out of ten respondents said that increasing productivity through technology was a medium or major priority.
The CIO magazine poll found that companies are changing the way they view IT. Business leaders are moving their tech budgets from core business concerns to edge concerns, like mobile, customer relationship management, and cloud computing. Over half of the poll’s respondents are planning IT budget increases in applications, and 41% intend to spend more on newer products.
Similarly, the CEB survey showed that one-third of the global IT budget in 2014 went toward innovation and business opportunity. Fifty-seven percent was allocated for maintenance and mandatory compliance activities, down from 63% in 2011.
Tech Dollars Heading to Cyber Security, Big Data, Mobile and the Cloud
Business analytics and big data, cloud computing, cyber security, mobile, and shared services will be leading areas for IT spending in 2015.
With mobile devices continuing to proliferate, companies are expected to increase their focus on meeting customers’ needs in several contexts. These new requirements will force businesses to adapt their overall approach to mobile. User experience in particular is likely to receive more attention in 2015.
Cloud computing has advanced in tandem with mobile devices. Companies will need to use the cloud to address external business processes and other gritty issues that have eluded internal enterprise systems for years. As companies seek to remain competitive, cloud-based solutions will likely help with productivity, efficiency, and easing product launches.
Investments in big data are expected to help in this regard. Many companies are looking to use analytics in order to make better business decisions, improve marketing efforts, and enhance customer experience.
The rise in cyber security threats is anticipated to drive more spending on protection against hackers. Many companies will invest a sizable part of their IT budgets on the security of their data, networks and computer infrastructure.
To make room in the budget for these expenditures, businesses are looking to save money. As part of their cost-cutting efforts, many companies have already moved some of their IT and business functions to an outsourcing and/or shared services model.
These restructuring plans are aimed at providing more standardised IT processes, a higher degree of automation, and a reduction in operating costs. Analysts expect this trend to grow in 2015.
Reshaping the Strategic Role of IT in the Business World
Infrastructure and security still remain fundamentally important considerations. However, business improvement has now become the core mission of IT for organisations both big and small.
Companies are recognising the need to harness new technologies. They are incorporating IT into their overall strategies, both to maintain their current systems and to pursue innovation.
Technology now plays a role in every facet of a company. As a result, businesses can no longer afford to disconnect IT from their decision-making processes.
Those that fail to mesh their tech considerations with their business agendas put themselves at a competitive disadvantage. This conservative attitude can be the biggest constraint to facilitating growth through bolder investments in IT.
Geoff is a highly experienced and skilled Technology Director at Surety IT. His knowledge is based on years of industry experience having created customised, stable, well performing systems both for multi-national companies in the UK and Australia and Surety IT customers.
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