IT budgets paint a brighter 2002

A glimmer of hope in a stagnant market shows up in the results of Australian research that points to an increase in IT budgets in 2002.

More than half the 74 CIOs and IT decision makers who responded to a survey on IT spending expect budgets to increase up to 20 per cent, while six per cent predicted it could rise between 20 and 50 per cent.

The research, which Dimension Data conducted at its 2001 seminars in Sydney, Melbourne, Perth, Adelaide and Canberra, also revealed half of the respondents had budget increases this year, but IT professionals who spoke to Computerworld were sceptical.

An IT director from a government department, who requested anonymity, said her IT budget has not increased this year at all due to budget restrictions, and she expects next year to be the same.

A manufacturing company IT professional said his budget increased this year only because of an SAP upgrade, but expects next year's spending to remain the same.

He said many IT departments have an accountant as their head, adding "accountants know the cost of everything, but the value of nothing".

When asked to identify the main barriers to investment spending, 50 per cent of respondents identified establishing a proven return on investment, 35 per cent cited obtaining budget approval from executives and 23 per cent identified cut backs on discretionary spending.

Dimension Data chief operating officer, Scott Petty, said business will continue to focus on the proven benefits of IT for at least another two to three years.

"Even if the downturn ends in 2002 it will take management a while longer to get over the mental scars from the dotcom era," Petty said.

However, he said most significant areas of spending cited in the research was network infrastructure, server hardware, data and storage recovery and Internet applications.

Dimension Data chief technology officer, Gerard Florian, said spending is also being spread across a range of areas rather than on 'monolithic implementations'.

He said respondents were concerned about staff losses and the impact of reduced spending on jeopardising overall IT strategy. Survey respondents were from organisations with more than 3000 employees (26 per cent), 1000 to 2999 employees (19 per cent) and from companies with 250 to 999 employees (55 per cent).

Peter Hind, InTep program manager at industry analyst IDC (InTep is a forum of IT managers and CIOs), agreed with Dimension Data's findings that network infrastructure, server hardware and data storage will be the three main areas for IT spend, but was concerned with the cutting of large CRM and ERP projects and enterprise applications.

"Businesses will focus on consolidation of servers or disk storage for greater cost saving advantage. But bigger projects, such as CRM and ERP, I don't see a climate for," he said.

Chris Morris, principal of research firm Morris and Associates agreed that the loss of IT staff and the marginalisation of IT budgets will jeopardise the success of the overall IT vision.

"Anyone who thinks that IT is just an overhead is stuck somewhere before 1990. Or they have a political agenda to control the influence of IT in their organisation," Morris said.

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