IT Spending to Rise, Though Growth Remains Sluggish

The outlook for 2015 is mostly positive, with innovations in mobility, business intelligence and cloud computing, Computer Economics found.

IT management and spending

IT operational spending is projected to increase 3 percent at the median in the United States and Canada as tech executives look ahead to 2015, seeing a business climate that is improving with sustainable, if not remarkable, growth, according to a report from Computer Economics.

The outlook for 2015 is mostly positive, with innovations in mobility, business intelligence and cloud computing enabling businesses to derive transformational value from their IT investments.

However, the report warned that at the same time, IT spending faces real constraints in the slow-growth environment, and IT executives will need to grapple with finding resources to maintain existing infrastructure while investing in transformational technology—a factor that is expected to remain a challenge for many years ahead.

"Our study shows that many IT organizations will be budgeting for projects in these areas and fewer are budgeting for infrastructure projects," John Longwell, vice president of research at Computer Economics, told eWEEK. "From other research, we can show that companies that rely mostly on the cloud have lower IT spending than the norm."

The annual report provides guidance for IT executives as they firm up spending plans for the coming year and is based on the company’s survey of 128 IT organizations worldwide, including 68 IT organizations in North America.

The study assesses IT spending plans for 2015, priorities for IT spending and investment, and plans for hiring, outsourcing and use of contractors and part-time workers.

"The confidence is generally good and the hiring that is occurring reflects that sentiment. IT organizations are no longer just relying on contractors, but they are bringing on regular, full-time employees," Longwell said. "This is a shift that has been occurring over the last year and it reflects increased confidence in the sustainability of the recovery. We are also seeing less emphasis on cost cutting and more emphasis on improving IT service levels."

The report projected IT capital budgets will remain flat, showing little or no growth at the median, and IT organizations will continue to invest in enterprise applications, security and business intelligence.

However, spending on data center infrastructure is expected to remain weak, but more than half of IT organizations will increase IT staff headcount.

"Companies are investing in business systems that promise to enhance sales and marketing operations," Longwell said. "There is still a focus on quick payback, but there is a greater willingness to invest strategically for growth. One reason organizations are showing more interest in cloud-based applications is the lower upfront costs and quicker return on investment."

The company is also projecting a shift from the use of contractors to the hiring of more full-time, regular employees.The typical IT worker will receive a 3 percent pay raise, and IT organizations will need to pay greater attention to recruitment, training and retention activities.

"Capital spending will remain somewhat weak, but operational budgets are poised for modest improvement," Longwell said. "Beyond that, we have no special insight into how things will unfold. In areas where IT can enhance productivity, companies will make those investments--otherwise, IT spending will track with top-line revenue growth."