Corporate IT Budgets Seen Rising For First Time In Three Years

First Published Monday, 4th October 2010 12:15 pm - © 2010 Dow Jones


By Ian Sherr

Of Dow Jones NEWSWIRES

SAN FRANCISCO -(Dow Jones)- Corporate IT budgets are expected to grow for the first time in three years as companies take advantage of new technologies like cloud computing and advanced data mining.

Companies are expected to raise budgets for running their technology operations by an average of 3.3% next year, according to a Corporate Executive Board (EXBD) survey expected to be released later this month. Much of that will be spent on services that can provide analytics and other tools that help target customers, the CEB survey of about 150 member companies found.

Spending on hardware, however, is expected to drop as companies become more reliant on cloud computing, which allows data and applications to be stored and accessed via the Internet rather than on a desktop computer.

"The continuing externalization of IT is a fact of life," Shvetank Shah, who conducted the survey, told Dow Jones Newswires.

The survey results suggest companies offering IT services, like Hewlett-Packard Co. (HPQ) and International Business Machines Inc. (IBM), could be poised to flourish. So could smaller companies, such as Salesforce.com Inc. (CRM) and SuccessFactors Inc. (SFSF), which provide cloud-accessible software for managing sales and human resources departments.

The adoption of outsourced analytics and services means less budgeting for internal staff, Shah said.

Budgeting for internal technology staff is expected to represent 11% of capital spending on average, down from 12% for the past two years, the survey found.

The adoption of cloud computing will push budgets for services and consulting to 20% of the overall budget next year from 16% in 2009. Spending on hardware is seen falling on average to 27% of budgets in 2011 from 32% in 2009.

Companies will still invest in software and hardware, Shah added, but much of it will have different purposes. A parallel CEB survey which hasn't yet been released shows nearly a quarter of the companies polled have already deployed Apple Inc. (AAPL) iPads. It fits with the trend of focusing on analytics, data mining and eking out efficiency through increased mobility, Shah said.

-By Ian Sherr, Dow Jones Newswires; 415-439-6455; ian.sherr@dowjones.com

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