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Forecast 2014: How to wring value from your IT budget

Stacy Collett | Sept. 24, 2013
According to Gartner, IT budgets will chug along with small but steady 2.9% average annual increases through 2014. But what will the top five areas of increased and decreased IT spending, and top business priorities?

Top Budget Priorities
" Top five areas of increased IT spending in 2014:

  1. Security technologies
  2. Cloud computing
  3. Virtualization
  4. Wireless/mobile
  5. Business analytics

" Top five areas of decreased IT spending in 2014:

  1. Hardware
  2.  On-premises software
  3. Data center consolidation/optimization
  4. IT/network services management
  5. Unified communications

Top Business Priorities

  • Containing costs: 65%
  • Optimizing and automating business processes: 55%
  • Optimizing existing investments: 48%
  • Accelerating business process and agility: 45%
  • Improving collaboration with business: 34%

Biggest Leadership Challenges

  • Budget constraints/economic pressures: 26%
  • Managing expectations/business alignment: 14%
  • Security: 11%
  • Managing projects: 10%
  • Managing personnel: 7%
  • Improving the customer experience: 7%

Source: Computerworld 2014 Forecast survey of 221 IT executives, June 2013

Computerworld's survey showed a slightly higher average IT budget increase of 4.4% for 2014. And Forrester Research is even more optimistic, predicting that U.S. IT budgets will increase 6.7% in 2014, with spending on software, the cloud and analytics rising and hardware expenditures falling. Forrester analyst Andrew Bartels says his firm based its outlook on expectations that the U.S. economy will improve in 2014, exports to China, India and Europe will increase, and many companies will be itching to buy new technologies.

"Cloud, mobile, smart technologies are all very desirable, and we're finding that as companies are prioritizing those — and as the economy improves — they'll have more room to spend on that," Bartels says.

But while IT budgets are growing, and goals center around improving service levels, productivity and customer satisfaction, containing costs is still the No. 1 business priority for 65% of Computerworld's survey respondents, and about a quarter of survey takers cite budget constraints as the biggest leadership challenge.

As always, the pressure is on for IT to do more.

The Big Squeeze
These days, IT is being squeezed from all directions. Two years ago, Texas A&M University-Kingsville underwent massive spending cuts that slashed its IT budget by almost 22%. But with the economic downturn also came 25% enrollment growth, which often happens when unemployed people decide to learn new skills.

"Now our departments are looking to us for how to handle the increase when they [also] have less staff," says Robert Paulson, CIO and associate vice president of technology. But with the university's IT budget rising only 3% in 2014, "it puts more demands on technology and using technology wisely," he adds. "Now we're looking at long-range budgets, and it seems very difficult to get that IT money back."


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