APAC spends can rise by 7 pc in a bleak climate

MUMBAI, INDIA: IT budgets for 2013 in Asia Pacific are in better shape than in the rest of the world, but not by much, according to Forrester Research's new "Asia Pacific CIO Budgets and Priorities in 2013" report, launched in conjunction with Forrester's Summit for CIOs in Asia Pacific today.

Although 18 per cent of organizations in the region will increase their IT spending by seven per cent or more in 2013, most CIOs in Asia Pacific are coming under far more budget pressures than in previous years. Overall, less than half (45 per cent) of Asia Pacific organizations will increase their IT spending in 2013, and almost one-quarter (21 per cent) will reduce their IT capital spending.

The situation is less bleak in India as the country leads the region in budget expansion, even ahead of China. The share of organizations increasing their IT budgets by more than 10 per cent is especially high in India (19 per cent), followed by China (14 per cent).

As if slow budget growth weren't enough, Indian CIOs are starting from smaller bases than their peers in more developed markets. As a share of revenue, India and China will spend the least in the region on IT: 3.0 per cent and 1.4 per cent respectively.

But these two countries, along with the Philippines, are also growing their IT budgets the fastest. Economic conditions in India and China have worsened since the survey was taken, so actual growth may be lower than expectations. 

Asia Pacific CIOs now directly control less than 60 per cent of enterprise IT spending. IT groups in Asia Pacific account for 58 per cent of IT purchases in 2012 - down from 2010, when they purchased 74 per cent of their organization's IT. In contrast, Forrester's data shows that business leaders are often growing their IT spending at very healthy rates even as CIOs deal with budget reductions. Business leaders focused on business outcomes and innovation directly controlled 33 per cent of regional enterprise IT spending in 2012 -- a share that is growing quickly.

"Indian organizations planned to expand their IT spending at faster rates than their regional peers at the beginning of the year," writes Dane Anderson, Vice President, Research Director and Asia Pacific Manager at Forrester Research. "However, the deteriorating economic conditions since then have dampened some of their aggressive plans. In spite of the current pressures, we expect Indian IT budgets to be among the fastest-growing in the world for years to come."

Consistent with the pressures CIOs face, the research findings show that the top two technology initiatives prioritized by IT departments across Asia Pacific are budgetary related: 54 per cent cite ‘improving budget delivery performance' as a priority, while 52 per cent cite ‘improving IT budget performance'. In comparison, ‘data and analytics to improve business outcomes' ranks as business leaders' top IT priority for 2013, while it came in third for IT leaders. More importantly, the top reason that business leaders are spending more on technology is because they believe that it's too important for the business not to be involved.