Global IT spend to go up next budget year

MUMBAI, INDIA: Thirty-nine per cent of organizations globally expect IT budgets to increase in the next budget year, while in Asia Pacific the expectation is slightly high at 44 per cent, according to a recent worldwide survey by Gartner, Inc.

Of the Asia Pacific respondents expecting an increase, 72 per cent plan for increases of more than 10 per cent and 36 per cent expect more than 20 per cent increase over the current year’s budget, Gartner said in a press release.

The analyst firm said it surveyed more than 1,500 IT leaders in 40 countries to understand general IT spending trends and spending on key IT initiatives, such as cloud computing, business process improvement, data centre expansion / consolidation, enterprise software implementation / upgrade, outsourcing, security, risk and compliance.

“Following two years of tumultuous change and uncertainty, IT budgets will increase modestly in 2011; however, responses indicate that the ‘new normal’ is as much about where the money is going as how much is available,” said Derry Finkeldey, principal research analyst at Gartner.

Finkeldey observed that Asia Pacific was not as hard hit as other regions by the economic downturn and the region is resilient, currently experiencing a return to growth.

Enterprise software implementations and upgrades are receiving the greatest investment focus in Asia Pacific, with 85 per cent of organizations allocating budget to implementations in the current budget year, with most planning to spend at the same or higher levels in 2011, the survey added. On an average, these organizations are investing around 23 per cent of their IT budgets on initiatives in this area.

Something cloudy

Interestingly, all respondents in Asia Pacific are investing in data centre consolidation or expansion initiatives in the current year. However, despite the hype, 63 per cent of respondents in Asia Pacific have not budgeted for any type of cloud service in 2010. But 34 per cent have allocated IT budget to cloud computing as a key initiative for their organization and those that are investing in cloud are planning high growth in spending in 2011.

“While we are seeing growing interest in cloud computing, most organizations are still learning when it comes to cloud services initiatives,” said Finkeldey.

“But this doesn’t mean they are not thinking about it — data centre initiatives such as virtualization are currently higher on the priority list than cloud, but these initiatives are the necessary precursors to a move towards cloud computing. We are seeing that the money is now shifting from traditional IT budget categories to new types of spending,” she added.

The IT budget distribution across spending lines is fairly consistent globally, especially for telecommunications services and external IT services, with IT personnel accounting for about 30 per cent; data centre systems 24 per cent; end-user equipment such as software and PCs 20 per cent; telecom costs 14 per cent; and IT services 13 per cent.

According to Gartner, external IT services account for 12.5 per cent of the average IT budget globally. However, 20 per cent of respondents in Asia Pacific have not allocated any IT budget to external IT services, suggesting good continuing market growth opportunity as buyers mature — especially in countries such as China.

Twenty-three per cent of IT budgets in Asia Pacific are allocated to enterprise software initiatives, with 35 per cent of budgets for new software licenses allocated to horizontal software. 83 per cent of respondents are planning to spend on office and productivity software and 63 per cent on CRM applications.