Business innovation is a hot topic for many, if not all, organizations worldwide. The key to achieving this is technology, which is why IT is always getting a large chunk of the company’s budget. Innovative enterprises are always looking for new technologies to support their business objectives and enhance their processes to win more customers.
These are the key areas that made it to the top list for IT spending according to Computerworld’s 2015 annual forecast survey.
With all the security risks that threaten the industry, security is the number one priority for many enterprises. In fact, IDC Global Technology and Industry Research Organization analyst Stephen Minton said IT spending on security has been steadily growing over the past decade, remarkably increasing at double-digit every year. Investment on security includes identity management, intrusion prevention, access control, as well as virus and malware protection.
- Cloud Computing
Many companies continue to adopt the cloud, saying goodbye to expensive on-premises infrastructure investments. Many enterprises are now embracing Software as a Service (SaaS) and a combination of public, private, hybrid and community clouds.
The agility, scalability and availability of cloud computing encourages companies to migrate to the said platform. Many organizations make the move because of the significant cost savings from not having to invest on infrastructure, storage and systems. They are now spending on Infrastructure as a Service (IaaS) and Software as a Service (SaaS).
- Business Analytics
Digital business is the theme for IT spending this year, according to Gartner analyst Richard Gordon. With the vast amount of information coming from the customers and social media, companies are getting more agitated to process and extract value from the available data. As such, many enterprises are beginning to understand the value of Big Data and have expressed interest in investing in business intelligence, data mining and enterprise analytics.
- Application Development
Developing, upgrading and replacing applications are another areas that get a huge chunk of the IT budget. Getting more functionality to market new offerings, enhance the relationship with customers and deliver more value to consumers are motivating companies to develop applications.
- Wireless Mobile
With the popularity of wireless technology and mobile devices, many enterprises are spending money on infrastructure, mobile device management systems, Wi-Fi, remote access tools and RFID technology. Since ‘Bring Your Own Device’ culture is also gaining popularity, many companies are spending on technology to support this program.
The forecasts for 2015
In the most recent forecast by Gartner that was released in April 2015, IT spending across the globe will decline by 1.3 percent this year. Interestingly, the decline was not due to companies cutting costs. It was attributed to the rising U.S. dollar.
Here are the highlights of the Gartner forecast:
- Spending on devices is projected to shrink to $685 billion, or 1.2 percent lower than last year’s $693 billion.
The devices include personal computers, printers and mobile devices such as phones and tablets. The decline was due to the drop in the number of purchased PCs in countries where the local currency has depreciated against the dollar, such as Western Europe, Japan and Russia.
Meanwhile, the devaluation of some local currencies against the U.S. dollar did not affect the mobile phone market. It was the trend on preferred smartphones in the emerging market that flatten the average selling price of smartphones. Customers in the emerging markets are now opting for less expensive phones, and this scenario negates the increasing costs of first-rate phones.
- Spending on the data center system is forecasted to total $142 billion, a very minimal increase of 0.4 percent.
The changes in currency value have brought a significant impact on the server market because of the pricing pressure faced by vendors since their margins are relatively lower. Other segments that were also affected include enterprise network equipment and external storage, which are controller-based.
- Spending on enterprise software market is projected to reach $320 billion, an increase of 2.3 percent compared with last year’s $313 billion.
Despite the increase, this forecast is actually lower than what was expected. The revised number was due to the significant decrease in the spending for Office Suite. It is the Office 365 offering that is winning more customers, and its cost is prorated over the duration of the subscription period. As a result, the revenue growth is lower.
- Spending on IT services is predicted to decrease slightly by 0.7 percent, from $948 billion last year to $942 billion this year.
IT implementation spending is expected to decrease, particularly in the oil and gas industry. Even though this industry makes only one percent of the IT services segment, the buyers from this sector react quickly when their prices are hit, cutting back their IT spending by at least 20 percent. The largest spending reduction is expected to take place in the United States, a large oil producer and is, therefore, a large market for IT services. This trend is expected to extend until 2016 according to Gartner.
- Spending on telecom services is forecasted to decrease by 2.6 percent this year, from $1.61 trillion last year to $1.57 this year.
The declining figure is attributed to the shrinking connections for developed markets including the United States and several Western European countries. Apparently, the growth in multi-SIM connections and data-only connected devices were not as significant as was previously expected.
Even though many organizations put technology as one of the essential items in their budget, many business leaders and IT professionals are still making cost containment as one of their top priorities. While innovating and automating business processes are their key business objectives, many companies are scrutinizing all available technology options to optimize their budget.
Contact Four Cornerstone now if you need some help in evaluating your technology investment. Our Oracle Consulting in Dallas Fort Worth is available to share their expertise in aligning your IT spending to your business objectives and priorities. You can call us at 817-377-1144.