CIOs May Get More Adventurous in Spending IT Bucks

Global corporate spending on IT is entering a new cycle, characterized by lackluster or modest growth and, at the same time, new opportunities with new technologies. So said research firm Gartner at its annual Symposium/ITxpo, held this week in Orlando, Fla.

From a 30,000-foot view, the growth story is a modest one. Global businesses will spend about US$2.4 trillion this year on computers, servers and other such information technology hardware, Gartner forecast. Next year, that number will jump 3.1 percent to $2.5 trillion, and it will reach $2.8 trillion by 2014.

The growth will be dispersed unevenly, though. Vertical industries such as financial services and manufacturing will not open their purses until 2012 or 2013.

Changing Trends

Despite this rather conservative level of spend, Gartner foresees a more adventurous attitude on the part of companies as they approach their IT purchases.

Despite the recession, businesses have developed a more mature understanding of IT, Gartner observed, and they are likely to ask whether a particular investment is good for the enterprise before asking what it costs.

Companies are also becoming far more willing to spend on new technologies such as social network analysis, cloud computing and context-aware computing, according to the firm. That is due to the explosion of unstructured content and data on the Web, buried in videos, podcasts and blogs.

Businesses need to make sense of the unprecedented amounts of information outside the enterprise as well as the blurring boundaries between personal and professional, Gartner said.

There’s also a shift in focus from outputs — measured in terms of projects completed, budget run-rate, servers deployed, network uptime — to outcomes, as companies invest in IT, Gartner said. By focusing on outcomes, CIOs also address value and innovation.

Gartner was unable to return the E-Commerce Times’ call requesting further information in time for publication.

Speculative So Far

Much of this vision is speculative, said Marshall Van Alstyne, a professor at Boston University, and doesn’t take into account the as-yet unrealized potential of collaboration tools that are expected to improve productivity.

“Social networking tools like Facebook and MySpace have yet to contribute to the bottom line of IT-consuming companies in measurable ways,” Van Alstyne told the E-Commerce Times.

New measurement methods and new collaboration tools are likely to emerge within a three year timeframe, he suggested.

In the meantime, companies will continue to invest in technologies that have proven themselves, said Van Alstyne.

“Firms are likely to expand their use of hosted services and cloud computing as a way to deal with market uncertainty,” he predicted. “They can easily cut back on such services if their own internal demand falls short. In effect, they are likely to be trading fixed costs (acquisition) for variable costs (hosted services) that can flexibly expand and contract as needed.”

Firms will be inclined to stick to the tried-and-true, said Mike Logan, president of Axis Technology, but on a more ambitious scale.

For example, one Axis client acquired an SAP license but decided not to implement it right away because of the cost. Now it is going forward, Logan told the E-Commerce Times. “I think we will see more of this — companies taking measured gambles with their IT, but in areas that they know will deliver.”