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IT budgets on the rise

Rey R. Vicente | May 15, 2012
Improving competitiveness and controlling costs remain the major objectives of companies seeking for technologies to invest on.

Improving competitiveness and controlling costs remain the major objectives of companies seeking for technologies to invest on. The migration to more modern platforms and applications has become more important for many businesses while others, to save on costs, remain comfortable with the technology level of their existing systems.

These were the key findings of the IT Spending survey conducted by Computerworld Philippines Research Group covering 100 organizations from December last year to February this year. For the purposes of the survey, an organization's IT budget include spending allocations for staff, hardware, software, communications, services and other operating budgets. It should also be noted that the impact of the changing market conditions on user priorities influences IT investment decisions."

Increased Budgets

Most companies have more to spend for IT this year as 46% of survey respondents reported plans to increase IT budget to finance and implement new projects. And if corporate profits improve over the next three to six months, 31% of these firms are optimistic that they will definitely hike their spending above their current plans, while, in all probability, 33% will raise their technology spending above what they have planned.

An IT manager of a foreign construction firm, when interviewed, summarized the position of local businesses regarding technology spending this year. Arthur Diaz, IT manager of Japanese-owned Kajima Corporation, relayed that the need to invest in more powerful and standard hardware and software has become the company's order of the day.

"We have been cutting cost for the past years, striving to extend the life of our hardware as best as we could. But whether we like it or not, we have now reached the time to replace equipment which have become too old and slow," noted Diaz. Although the implementation of this project calls for higher IT allocations, "we have to replace aging hardware with new ones to run the business better and boost the company's competitive advantage," he added.

Of those who have increased their budgets, 22% reported the hike will range from 10% to 20% compared with their 2011 budget, while seven percent said the expansion will average from 21% to 40%. While six percent disclosed that their budgets have gone up by less than 10%, only four percent divulged that they expect an increase of more than 100%.

The survey also found out that the average IT budget as a percentage of the company's revenue remains very low, averaging below five percent of corporate revenue as disclosed by 30% of respondents. Thirty-nine percent claimed they allotted an average of 5% to 10% of their revenue to IT while only 21% said more than 10% has been allocated to their IT budgets.


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