IT spending in 2011 operating budgets is expected to rise at a median range of 3.3 percent-the first increase in three years-according to research published by Washington, D.C.-based benchmarking analyst firm Corporate Executive Board. While 60 percent of that budget will be spent on labor-either internal IT employees or contractors and outsourced labor-only a modest 1 percent increase in staffing is expected.
Fifty-five percent of companies interviewed in the research are reported to be increasing internal staff next year, with 17 percent reporting there will be a decrease in internal staff. Twenty-three percent of companies reported an increase in contractors, while 40 percent are decreasing contract staff. About 40 percent are keeping contract budgets flat.
"As shown in the budget data, over half of technology enablement opportunities in the business areas that drive growth-innovation, marketing, sales, customer service-relate to data analytics, collaboration or the customer interface," Shvetank Shah, executive director of the Corporate Executive Board's Information Technology practice, told eWEEK. "At the heart of each of these is the need to capture, integrate and interpret information, both structured and unstructured."
Infrastructure-centric services such as data center management, server support, and QA and application testing functions are increasingly moving away from internal IT staffs. The most stable functions within IT include application development, application maintenance and networking. The areas that are growing within internal IT staff include more business-centric functions, such as project management, strategic planning and enterprise architecture.
Business intelligence is one area of IT expected to gain ground in 2011 and away from creating automated functions like those found in ERP systems. Why is that?
"Most Fortune 500 companies have gone through their first or second waves of ERP and have automated the structured processes that lend themselves to reasonably simple business process mapping," said Shah. "In 2011, businesses will be navigating through continued macroeconomic uncertainty, with constraints on capital availability, customer fickleness and broad employee skepticism."
Growing through this time means leaders will need to simultaneously be bold in some areas and dare to be "adequate" in others. Pulling off this balancing act will require even richer analytics and data-driven insight to supplement executive intuition.
The four largest industries to have operational budget increases in the 6 to 7 percent range are retail, software/IT services, pharmaceuticals and energy. Hardware and electronics, restaurant and hospitality services, utilities, and financial services are increasing in the 3 to 5 percent range. Government, public sector and banking industries are the three industries that will remain the most flat next year.