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Strategic IT spending is back. An informal survey of several hundred large businesses that are clients of my company, staffing firm Hudson Global Resources, found that on average they expect to increase their IT budgets this year by 10 to 20 percent.
After focusing, in recent years, on technology that cuts costs, companies are increasingly turning to IT products that help them grow their business and gain a competitive edge. They are also responding to pent-up demand to replace aging hardware and software and investing in IT to ensure their ability to comply with new regulations.
At the top of the spending list are products that buttress network security, which has reached red-alert status for senior executives in all industries. As companies increasingly send work offshore, they are stepping up system protections. Moreover, after declining for three years, the number of computer viruses increased last year, according to McAfee. Worse, the viruses are becoming more virulent. Attacks posing a medium or higher risk more than doubled, to 46, last year.
Under these grim conditions, demand will inevitably grow for security products that enable companies to filter out Internet attacks before they hit corporate systems. Some companies look to hire IT network security professionals to help with this effort, but others plan to rely on contractors.
At the same time, a number of companies will be pursuing major PC refresh programs this year. After delaying upgrades for several years during the economic downturn, they are starting to install new equipment.
Companies will continue complying with the Sarbanes-Oxley Act, which requires them to audit and manage their internal controls, many of which are run on IT applications. In many cases, companies will find it easier to comply by deploying new or enhanced applications. Compliance with other regulations, such as the Health Insurance Portability and Accountability Act and the USA Patriot Act, will similarly spur IT activity.
Newer technologies are attracting interest. Many companies are trying VOIP (voice over IP), which can lower costs and increase collaboration. As positive reports from early VOIP adopters appear, more companies will follow.
Technologies that depend on Microsofts .Net Web services platform are gaining momentum as well. As computing becomes increasingly browser-oriented, there will be a sizable upswing in Web application projects.
Of course, some mature technologies such as enterprise resource planning will continue to see slowing growth this year. But promising new technologies are gaining enough traction to more than make up for them. This year is shaping up to be the best so far for technology in the 21st century.
Kevin Knaul is executive vice president for Hudson Global Resources IT & telecommunications practice group. Free Spectrum is a forum for the IT community and welcomes contributions. Send submissions to free_spectrum@ziffdavis.com.