The Current Scenario
As the previously sluggish economy now shows signs of revival, companies are gearing up to strategize their IT budgets. The past couple of years saw chief information officers (CIOs) focus their IT expenditures on ‘staying afloat’, targeting maintenance or expansion of the existing capabilities and perhaps upgrading of existing technologies, and thereby playing safe. The current situation, however, looks more promising. The slight upsurge in budgets is resulting in increase in adoption of emerging new-age solutions, which will be more efficient, change the way people work and thus create processes that will promote cost reduction in the long run. According to a survey by Computerworld magazine, IT budgets in 2015 may see an average increase of 4.3% over the previous year, and go as high as 13.1% in some cases.
With the emergence of newer, smarter technologies that promote decentralization, such as cloud services and Software-as-a-Service (SaaS), the IT divisions of major companies will witness a paradigm shift from traditional close-controlled solutions to more agile and distributed solutions. Tough competition is now forcing IT heads to set aside sizeable chunks of their budgets for innovations that will help expand business and reach more customers.
Major IT Budget Trends in 2015
The IT budgets of 2015 across major companies reveal the following key focus areas:
The year 2015 is witnessing a rise in the number of organizations transitioning to cloud-based solutions. The direct benefit is the reduced burden of maintaining expensive in-house technology. As a result, budgets meant originally to procure servers, storage devices, and other hardware infrastructure can now be redirected toward procuring smart, cloud-based solutions. With several cloud-based expert service providers on the horizon, it makes business sense to move to a quickly developed customization that is both cost-effective and managed more reliably than an internally developed solution.
Mobility across various platforms is a challenge for companies that want to stay abreast or get ahead of competition. Businesses need to invest in building mobile applications, or upgrade or revamp existing ones, as these applications are the ‘face’ of the company. Since these applications are pitted against a host of known and unknown competitive offerings on the customer’s personal smartphone or mobile device, the shelf life is limited.
A trend that is gaining popularity is the employee-facing mobile application that focuses on improving employee productivity, business efficiency, and internal processes. For this, the IT division will need to acquire remote access control tools, Wi-Fi services, and new mobility management software systems. Employees could use a low-end, simple personal mobile device to log in to the company’s network over the Internet and start using the resources and applications for their work.
With the increasing number of solutions that use mobile applications and cloud-based services, sensitive information, which was earlier restricted to the internal networks of an organization or its close partners, is now traveling over the Internet. Confidential transmission of customer data over public networks is a major challenge. Even if well encrypted, it is prone to security threats. Hence, security is a top priority, and CIOs are targeting basic issues, such as robust systems that are protected against viruses and malware, and they are ready to invest in cutting-edge personal identification and access grant services.
Analytical Tools for Fuelling Business:
As information comes into the organization from all the entities that it interacts with, including customers, suppliers, and digital users, there is no dearth of data that is at the disposal of corporate enterprises. This offers opportunities to make smart business decisions. The gap between the data and the decision can be bridged by quick and accurate analysis of the data, justifying the acquisition of automated analytic tools by the IT department.
Digitization has led to unprecedented rates of changes and growth across all industries. According to the ‘2015 Gartner CIO Agenda Report’1, many companies have made digitization an integral part of their process. However, traditional mindsets and ways of working need to be reversed. Proven strategies, elaborate planning, and brainstorming will have to give way to quick execution models. Legacy systems will have to take a back seat to let the disruptive experimentation-based initiatives drive innovation.
Although IT budget in 2015 seems more open, the luxury of splurging on a risky ‘promising solution of the future’ does not exist. Since the expenditure budgets are still somewhat tight, investing in one area may have to be done at the cost of another. Companies need to strike a fine balance between running smooth operations and investing in the future. Budget planning and decision making is a crucial part of this transitioning period.
In fact, a lot of decisions for digitization and new innovations are taking place outside the IT budget, and some companies are witnessing the emergence of two parallel IT centers: the traditional company-wide department and the more localized one linked to a business unit. The local IT center is funded by the internal budget and resources of the business unit, which might be willing to take a calculated risk by investing in a new idea that will promote its own business.
It is widely believed that companies that are adaptive to the emerging trends in social, mobile, analytics and cloud-based technologies (SMAC) will outplay others that are slow to react. The year 2015 is one of realizing the importance of digitized, cost-effective products and initiatives. An open mindset, along with a bigger risk appetite, is needed for smart decision making. Though the changeover to secure, open services will take time, a gradual changeover is desirable for the stability of the company.