Spending bright spots loom: IDC

Seven years down the track, pressures facing CIOs today haven't changed significantly, according to IDC Australia's end user program manager, Peter Hind.

The top imperatives of cost reduction, aligning IT with the business and meeting user expectations remain the same, he said, launching the results of a new survey.

While an austere sentiment abounds in corporate IT ranks, Hind said, reports of the IT industry's death over the last 12 months have been greatly exaggerated.

"In early 2002, the evidence was that there was a significant decline in the IT industry. Budgets were being cut, contractors were being let go and there was an obsessive focus on the delivery of IT services; doom and gloom seemed everywhere," he said.

But a key indicator that Australia's ICT industry is improving lies in how IT is viewed in a more serious light which is revealed in IDC's Forecast for Management Survey (1996-2003) which canvassed 330 IT executives from the analyst firm's IT executive program - Intep.

While it confirmed organisations are treading cautiously with IT projects and initiatives, the survey did show some bright spots in technology spending and the reasons why.

Unfortunately, IT executives were more focused on the "here and now", with little funding or room for creativity, Hind said.

IT spending - as a proportion of annual turnover and operating expenditures - was stabilising this year, despite a savage pruning of IT budgets last year and wide sentiment among CIOs that "things were still tough", according to Hind.

And it is medium-sized organisations (with between 250 and 1000 staff) fuelling this stabilisation in spending - not the large - and reporting the largest increases in the proportion of their operating spend allocated to ICT.

From 2002 to 2003 the strongest growth areas in IT spending were security, firewalls and VPNs, and business continuity planning, according to Hind.

A tough environment for the industry in the last year has also changed organisations' outlook on training their IT personnel; fewer companies seem interested in retraining and recruiting staff, because of widespread fear of job insecurity amongst employees.

"The attitude has been 'you've got a job; consider yourself lucky'. And there's a feeling that anybody else could take your job," he said.

Commenting on the development of people's roles in the IT profession, Hind believes the results "are not reassuring" for those in the industry.

Around 94 per cent of local CIOs have no authority to spend on high-ticket items or new applications as they please, IDC found.

In turn, this increases the challenge for ICT vendors to win impromptu sales with IT execs in the year ahead, with more success likely at the beginning of an organisation's next budgeting cycle.

Since 1996, the makeup of the IT department has, however, changed significantly from predominantly operation-intensive staff to managing the do-ers, according to IDC. Seven years ago, 8 per cent of IT departments were made up of managers. Now 17 per cent are managers who manage people and the quality of service delivery. Also, application development roles dropped from 39 per cent in 1996 to 24 per cent in 2003.

In the last year, the most bullish growth technologies among IDC's Intep members (6000) has been in cable and DSL services, with the increasing price effectiveness of broadband and higher need for broadband services in enterprises and for mobile workforces as the drivers.

While more strategic business applications such as supply chain management, customer relationship management and sales force automoation fell as a spending priority for respondents last year – relegated to companies' too-hard lists - most respondents were renewing their faith in those technologies, realising they could not afford to ignore their potential to streamline business processes and increase revenue opportunities.

Also expected to become stellar technologies over the next few years are storage over IP solutions - in use in 7.4 per cent of organisations and tipped to increase by 15.4 per cent in the next two years. Other hot growth areas will be tablet PCs, voice over IP, mobile IP/WAP technologies and storage area networks, IDC predicted.

Among big business, Linux is having little impact, with only 2 per cent of large companies surveyed by IDC using Linux. Some 53 per cent of Australian organisations have no plans to use it, while 47 per cent of them are piloting or assessing whether to deploy it.

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