Corporate IT spending still tight

Despite negative signs and budgetary contraints Australian companies are investing in IT, albeit cautiously.

Gartner regional manager and director for ICT trends Asia Pacific, Heather Brigstocke, attributes such caution to "wavering investor confidence in corporate America and indications that a recovery is in doubt".

Brigstocke said technology investment is taking place in Australia, but the need to "continue to show value for every dollar being spent" governs IT leaders' decisions.

"Company boards want to understand how any forthcoming projects will translate into short-term, bottom-line returns," she said.

Consequently, CIOs and other IT executives will continue to seek ways to improve their margins, such as outsourcing non-core activities to reduce cost, Brigstocke said.

Investment in managed services will grow by 11 per cent, and business process and transaction management by 12.3 per cent, she said.

A CIO from a construction resources supplier said his IT department is spending more this year, but investment was restricted to mission-critical IT infrastructure replacement.

Other companies, like Starbucks Australia, will increase their IT spend in the 2003 fiscal year.

While declining to specify how much IT spend would increase nor the areas where it will be spent, the coffee retailer's IT manager, Aram Dayeian, said: "Starbucks is a fast-growing company and we are building our IT infrastructure and information systems one step at a time."

For most companies increased IT expenditure will be dedicated to areas that will deliver greater business opportunities.

Systems integration in particular will be strategically important to organisations, because it will allow them to "build new markets, improve communication between suppliers and customers online, and create new internal efficiencies", all of which will drive growth for Australia's IT services companies, Brigstocke said.

According to Gartner research, next year and through to 2005, Australian IT departments' key investments will be in outsourced security, in all its forms, and network infrastructure, with 50 per cent of companies planning such projects.

The top investment priorities for IT decision makers now are security (83.6 per cent) and network infrastructure (60 per cent).

Meanwhile, IT departments in the US got even stingier over the past two months, though they expect to start spending a little more freely by year-end, according to a new survey from The Goldman Sachs Group.

The broker's IT Spending Survey, which it conducts every two months with 100 IT managers from large companies, found that half of respondents have spent less than their budgets for the first half of the year. About half of those responding to the June survey expect to underspend through the rest of the year.

Once spending frees up, IT managers said their biggest demand will be for security offerings, customer relationship management applications, storage software, Windows and enterprise portals. Mainframes, Linux servers and data switching were among their lowest spending priorities, according to the survey.

Spending plans

High priority IT investment areas for next 12 months:

Security.

Network infrastructure.

Knowledge management.

B2E.

B2B.

E-procurement.

Web portals.

Supply chain management.

Application integration.

New mobile technologies.

Server consolidation.

Source: Gartner Dataquest, 2002.

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