IT Budgets Survey Results

October 14, 2012

It has long been argued that the UK needs to do more to nurture a culture of innovation in the technology sector if it is to compete with US firms. However, the UK’s Silicon ambitions may have a while to wait, as latest budget forecasts from CEB reveal CIOs plan to allocate roughly 30% of total IT spending next year on business opportunities, with innovation accounting for just 8%.

The global study from the member-based advisory firm shows CIOs expect a modest growth in total IT expenditure – just 1.8%, and roughly 50% less than they did in 2012. Operational expenditure will rise to 70% of budgets in 2013 , while capital expenditure growth will stay flat.

The IT Budget Benchmark Report is based on CIO forecasts in more than 200 companies across the globe, representing over £32 billion in IT spending. CIOs plan to increase spending on mobile applications in 2013, ensuring all applications are ready for the mobile environment from the outset, fitting into a broader trend in mobile spending.

The survey also records an expected growing migration to the cloud, as 54% of organisations plan to increase spending in this area. Almost half of this cloud spending will be spent on Software-as-a-Service (SaaS).

Andrew Horne, managing director for CEB, said: “Currently over two thirds of IT budgets in 2013 are already allocated to maintenance and regulatory compliance – essentially ‘keeping the lights on’ – before a single new project can be started. This inevitably means that the ability of companies to be innovative and set themselves apart from their competitors will be challenging. This increase in operation spend is in part a knock-on effect from high levels of spending prior to the spending of 2010 and 2011, meaning that CIOs are seeing any budget increases absorbed by the need to keep existing capabilities going.”

However, despite the modest growth CIOs may end up expanding their spending beyond what they initially predict. Horne continued: “Although currently CIOs are very cautious in their planning, they may well expand their budget if economic performance is better than expected. CIOs are becoming increasingly agile about their investments, with more people looking at rolling budget scenarios to embed a degree of flexibility.”

Additional findings from the report include:

· CIOs Continue to Struggle to Reduce Maintenance and Mandatory Spending

Despite CIOs’ efforts to reduce maintenance and mandatory spending, it continues to represent nearly 70% of total IT expenditure. This allocation has held stable over the past several years and is projected to remain constant through 2013.

· Information Management Projects Outweigh Process Automation Projects

Information management projects (customer interface, business intelligence, and collaboration) will account for more of the IT project budget than process automation projects (32% versus 30%).

· Services and Information Management Drive New IT Roles

IT organizations are developing roles such as service managers and information architects. These new roles are indicators of two key IT shifts: ITs movement from siloed service delivery to a more integrated model and the focus on information projects over process projects.

· Broad Deployment of End-to-End IT Services

Organizations that deploy end-to-end IT services tend to do so in a broad manner; nearly three-quarters of CIOs indicate that end-to-end IT services will account for at least 30% of their IT operating expenditure in 2012.