IT Budget Agenda 2008

By Dave Greenfield  |  Posted 2007-10-08 Print this article Print

Spending for IT goods and services is expected to grow next year, as organizations enter a new phase of technology acquisition. In 2008, IT will experience an 8 percent increase in spending over 2007 purchasing budgets—thats 3 percent more than in 2007, said Andrew Bartels, an analyst at Forrester Research, in Cambridge, Mass. Data center consolidation, infrastructure refresh and security enhancements have typified much of IT spending since 2000. For 2008, spending patterns are expected to begin to change, as companies focus more on increasing productivity than in cutting costs.
"Forrester talks about two periods of technology acquisition, which we call tech digestion and innovation growth," Bartels said.
During tech digestion, acquisition is all about price and ease of use, with budgets primarily driven by return on investment calculations. Theres a large focus on infrastructure rationalization and process automation—pretty much whats characterized technology acquisition for the past seven years or so. Next year will signal a point of transition, as well see a whole new level of investment for the next four or five years. Purchases will be driven more by functionality and less by ROI calculations. "There will be a shift from making processes more efficient to helping companies optimize business results by adding analytics and vertical industry knowledge," said Bartels. According to Forrester research, software spending will show the greatest increase over 2007, rising by 10 percent, fueled by the drive for greater productivity as well as the spread of virtualization software in the data center. Communications equipment purchasing will show the greatest percentage increase (9 percent more than the 2007 budget), heavily influenced by carrier infrastructure investment. Communications equipment purchasing by enterprises will be more modest, growing at 6 percent more than 2007 budgets. The budgets for computer equipment will show a slightly lower growth, at 4 percent, than it did in 2007, while budgets for IT services and outsourcing will jump by 8 percent. Macro Issues Discussions with industry analysts and IT professionals indicate that terms such as "security" and "disaster recovery" still have a place on ITs agenda, but moving up fast are terms including "green IT," "data analytics" and "knowledge transfer." This latter term is particularly important: The increasing mobility of workers means that organizations suffer when individuals take their knowledge and intelligence with them. Web 2.0 technologies, such as wikis, blogs, and enterprise tagging and bookmarking systems, are being looked at as one approach for capturing that intelligence. "Learning in major organizations is just repeated constantly," said Keely Flint, enterprise information architecture program manager, at Bupa Health, based in the United Kingdom. "We developed a library of use cases so that people might come to a central repository to trigger ideas for new projects or gain guidance for existing projects." Mike Pelligrino agrees. The vice president of IT at Fuji Film, in Valhalla, N.Y., said hes automated pretty much everything that can be automated. Next year hell start using Microsofts SharePoint platform for collecting latent information in the organization. "We have intranets and our internal Web sites, but everybody has their drawers stuffed with information, so the idea is to promote the use of SharePoint as a common platform," Pelligrino said. Pelligrino added that some of these technologies dont have obvious ROI. "There are some things that are just pure breakaway success from a technology standpoint, which the most progressive companies can leverage, that may not be so obvious from the standpoint of an ROI analysis," Pelligrino said. He cites the Web as one of the best examples. Organizations are also focusing on addressing immediate customer productivity requirements. GE Real Estates IT budget is expected to increase by 3 percent to 5 percent next year, according to CIO Hank Zupnick, and a major business priority for the company, a business unit of GE Commercial Finance, is electronic content management for providing easy access to business documents such as tenant leases and third-party vendor contracts. "We are also investing heavily in expanding our financial analytic capabilities, especially in the area of subledgers, moving from [Microsoft] Excel-based tracking to a Java-based system that integrates with our general ledger," said Zupnick, in an e-mail interview. New Yorks Westchester County will deploy new tools next year to help employees be more productive. These tools include a case management system for the countys mental health facility and an expanded point-of-sale system at the countys amusement park, Rye Playland, said Westchester County CIO Norm Jacknis. Page 2: IT Budget Agenda 2008


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