Digital Transformation | Hybrid Cloud | IoT

Wednesday, March 4, 2009

Strategic Perspective Impacts IT Investment


While most business leaders globally are planning on keeping their IT budgets flat and there will be no growth in 2009, a recent market study by analyst firm Datamonitor reveals that in some countries, people are much more confident about their future outlook -- with planned IT budget increases exceeding the decreases.

“It is clear there has been a noticeable decline in enterprise confidence. However, the findings are not as negative as might have been expected”, says Daniel Okubo, technology analyst with Datamonitor.

“Despite the rise in the proportion of IT budgets which are remaining flat, there are still a sizable proportion of enterprises which are planning to increase IT expenditure. Technology vendors should be keenly aware that the economic conditions of a country directly impacts enterprise IT budgets.”

Reacting to the Downside
Datamonitor surveyed 520 IT decision makers towards the end of 2008 to gain a better understanding of how business and IT decision makers are reacting to the global economic crisis, and to gauge their confidence levels.

Across all of the 14 countries surveyed in the second half of 2008, there was a rise in the proportion of planned IT budget decreases compared to a similar survey conducted in first half of 2008.

The percentage of IT decision makers who plan to decrease their IT budget significantly in 2009 has risen to 8 percent from 3 percent, over the last 6 months. Apparently, confidence is lowest in the UK, France and Italy.

In these three countries the proportion of respondents planning to decrease their IT budget outweighs those that are planning to increase their IT budget in 2009. Noticeably, there are also a significant proportion of enterprises in the U.S. and Spain that are planning IT budget decreases.

Unsurprisingly all these economies are projected negative GDP growth in 2009.

Thriving on Strategic Anticipation
However, regardless of the bleak outlook for some countries, enterprises in Benelux, Nordics and Australia appear to be much more confident about their future outlook with planned IT budget increases outstripping IT budget decreases.

These economies are expected to be less affected by the economic downturn, with the exception of Iceland, and this is reflected in Datamonitor’s findings. Moreover, rather than invest in new systems and associated software, more forward-looking companies are now choosing a different -- more strategic -- path to meet their IT needs.

Preparing for the Upside
Business and IT decision makers that are evolving to the managed and hosted services model are typically more interested in raising their efficiency and competitiveness, beyond merely cutting IT and networking costs.

While they share their peer group’s concern with the current economic environment, they also are preparing to pre-position their organizations for the eventual recovery. Rather than totally dwell on the negative, they have the foresight to lay the foundation now – enabling them to quickly act upon the upside opportunities.