IT spending is on the rise this year, according to major research firms, but this growth is less than previous estimates.
Gartner forecasts total IT spending in 2014 will grow 2.1 per cent to US$3.7 trillion worldwide – down from a former forecast of 3.2 per cent. IDC currently predicts spending will increase 4.1 per cent, down from its previous prediction of 4.6 per cent. And Forrester now tips spending growth at 3.3 per cent, rather than its prior expectation of 6.2 per cent.
So where is the spending going to be? What are IT leaders focusing on, and what should they be spending their money on?
Analysing data will continue to replace static reporting according to Gartner, and with only 30 per cent of organisations having invested in big data so far, it envisages there will be plenty of room for growth. Leveraging the vast amounts of data available from individuals and the growing Internet of Things is going to require collection, storage and analysis. This will push software sales in areas such as business intelligence (BI) as well as hardware sales, as older systems can’t handle the storage and processing of huge amounts of data.
SMEs should consider whether it’s more cost effective to do this by upgrading their own technology infrastructure or outsourcing to a cloud-based service that can collect and crunch the data for them.
Customers are getting more demanding with ever-increasing expectations, forcing companies to invest in customer-process technologies such as customer relationship management (CRM) and marketing automation. Business leaders see customer-oriented technologies as tools for winning, serving and retaining customers.
According to Raab VEST report, B2B marketing automation will grow 60 per cent in 2014 to reach US$1.2 billion. It still has only three per cent penetration among non-tech, mid-market companies. Research by Econsultancy and Responsys found that 49 per cent of marketers were planning a CRM investment before March, 2015. For smaller businesses with fewer human resources to nurture customer relationships, technology can play an even more critical role. There are many low cost ‘software as a service’ (SaaS) CRM providers putting the technology within reach.
Enterprises are expected to invest considerably more in cloud technology and replace old servers, storage and network gear. Gartner believes that by 2015, end-user spending on cloud services could total more than US$180 billion. Its research shows rapidly growing acceptance of the public cloud by enterprises.
For SMEs, cloud services can present even more of an advantage, as they’re scalable and cost effective, with price based on usage not total cost of ownership.
Larger organisations are spending big on digital initiatives, according to research by Tata Consultancy Services. Average spend per company will be US$113 million – with 70 per cent saying digital is important or most important – and digital technologies are seen as key to connecting with customers.
Smaller businesses won’t have these budgets, although many are already high users of digital and new media and have a mobile workforce. For those who lack the knowledge and skills of larger rivals to go digital, they may be able to utilise government initiatives. Australia provides a range of grants to businesses, including a tax incentive for research and development, and there are innovation funds in some regions.
This is the ‘next phase of the personal cloud’, where services and advertising are automatically tailored to consumer demands. It involves a device increasingly acting as a personal assistant for a user, understanding what they need and proactively presenting it to them, eventually acting on the user’s behalf through learnt or explicit rules. For example, it would automatically change a hotel booking if a flight is cancelled.
For businesses, it means having a greater knowledge of consumers, which will help them fine-tune their marketing approaches and offers. Businesses will need to adapt their strategies to take advantage of this, and create applications and devices that can harness it.
While mobile devices are one of the few categories seeing a bit of a cool-off, partly due to growing penetration rates, mobility as a whole is seeing greater investment. Thirty nine per cent of businesses listed it as a priority for 2014, according to TechTarget, and it’s also expected that by 2017 half of employers will require employees to use their own devices for work.
A major area for businesses of all sizes will be mobile security, with a focus on device management and mobile endpoint security. Wearable technology is also in the spotlight and businesses should keep an eye on the new smart watch segment.
Business leaders are moving towards new technologies, not investing in replacing old hardware and legacy software. They’re renting – cloud, ‘infrastructure as a service’ (IAAS), SaaS – rather than buying. They’re also embracing ‘bring your own device’ (BYOD) and investing in related software and security rather than buying actual hardware for employees. The overarching theme of spending in 2014 is innovation and non-ownership.
To discover new ways to save on IT procurement, read on.