Forecast 2015: IT spending on an upswing

Its IT budgeting time for 2015 and Barr Snyderwine is reaching for the stars.
Im going to present over 20% in increased IT spending to the executive team, says the CIO at Hargrove Inc., a trade show
and event services company in Lanham, Md. Im going to present everything I think we should be doing. On his wish list?
Mobile technologies that will make it easier to access floor plans and information from the trade show floor. Those technologies
will have to be integrated with internal workflow systems so its a little harder [and more expensive] to roll those out,
Snyderwine explains.
Hes also throwing in some teasers, such as a request for 100 Microsoft Surface tablets. Those are fabulous devices, but a
little pricey. We deal with a lot of graphics, so to put them on tablets at show sites, blow them up, see them and [manipulate]
them that could be a really killer app for us, Snyderwine says. He admits that the use case for such a splurge isnt there
yet, but he figures its worth putting out there.
When it comes to new technology, business leaders dont know what they dont know, he says. Therefore, its part of his
innovation strategy to make all parts of the organization aware of new technologies that can improve business processes and
bring in new customers. And why not? With the economy slowly improving, IT leaders are more optimistic that corporate purse
strings will loosen up in 2015, and theyre eager to bring new technologies into the fold in addition to just keeping the lights on.
Computerworlds annual Forecast survey of IT executives shows that IT budgets are indeed continuing to make a nice recovery.
Some 43% of the 194 respondents said that they expect their IT budgets to increase. Thats up from 36% in last years study.
This years average anticipated uptick is 13.1%, and overall, the expected changes in IT budgets reported by all respondents
average out to 4.3%. IT is expected to again kick up spending on security tools, customer-facing technologies and information
exchange/collaboration technologies that comprise the so-called SMAC stack social and mobile tools, analytic systems and
cloud computing. Meanwhile, its likely that hardware spending will continue to drop and services budgets will continue to rise.
Heres a look at what IT leaders say is on tap for 2015.
1. Security
High-profile security breaches at Home Depot, Target, Michaels and myriad other companies along with the explosion of
mobile technologies have propelled security spending to the top of the IT priority list for 2015. Nearly half (46%) of the IT
leaders who responded to our poll said that they will invest more next year in access control, intrusion prevention, identity
management, and virus and malware protection. Whenever there are these high-profile incidents, it does tend to drive IT
security spending even more quickly than it already was, says Stephen Minton, an analyst with the IDC Global Technology and
Industry Research Organization. Security spending has been a constant growth area for the past decade rising at doubledigit rates every year, he adds.
Balancing security and agility are top spending priorities for next year at Georgetown University in Washington. Thats a tall
order considering the IT department endured a 5% spending cut in 2014 and will see no new funds next year. But by squeezing
out IT efficiencies and centralizing some functions, the department was able to free up several million dollars for new projects.
We get roughly 45 million hits against our network on a yearly basis, says CIO Lisa Davis. We know that were a target in
terms of higher education and being on an unclassified network so we have to be very diligent in how were managing
[security]. But at the same time, we want to bring agility and have the freedom and openness that we want to support our
academic and research environments.
So Davis says that shes focusing a portion of her budget on a more proactive security posture that includes investing in a
FireEye threat prevention platform that will allow us to be responsive to security threats on our network so that we really
understand whats going on.

2. Cloud Computing
Companies continue to move away from big infrastructure investments in favor of cloud-based systems. More than 40% of the
respondents to the Computerworld Forecast survey said that their organizations will spend more on software as a service
(SaaS) and a mix of public, private, hybrid and community clouds in 2015.

Nevitt & Associates, an agricultural asset management company in Queen Creek, Ariz., will increase IT spending by 15% in
2015 after two years of flat budgets, says CIO David Dodds. As much as half of next years IT budget will go toward licensing
for cloud-based offerings such as Microsofts Office 365 software suite and Dropboxs file hosting service.
I want to be the IT guy whos out of the IT business, Dodds says. I dont have to have servers, and [employees can] bring
whatever computer they have or Ill just buy them a Chromebook. We can connect to a virtual desktop thats always ready,
clean, updated and secure and all I have to worry about is my Internet connection. He says he hopes to see his dream
become reality in two years, but right now most of his IT dollars are still spent just trying to keep the lights on.
For many companies, migrating to the cloud doesnt require new IT dollars just a shift away from infrastructure spending.
When companies move things to the cloud, theyre spending less on traditional on-premises technology. So instead of buying
their own servers, storage and systems, theyre buying infrastructure as a service or software as a service, says Minton. There
are exceptions, though. Small and midsize companies which may have the most to gain from the increased capabilities and
lower maintenance needs of hosted systems would require budget increases to move to the cloud. So it does drive some
new spending, he adds
3. Business Analytics
Big data is still a big deal for enterprises. Some 38% of the IT executives we surveyed said they will dedicate IT dollars to
enterprise analytics, data mining and business intelligence in the coming year
The theme for IT spending in 2015 is all around digital business, says Richard Gordon, a U.K.-based Gartner analyst. So
youre seeing spending in things like analytics. Theres a wave of data coming from customers and social media. And as the
Internet of Things rolls out, there will be even more information on customers. Businesses are scrambling to figure out how they
can extract value from that information.
Georgetowns Davis says higher education is just beginning to understand the value of big data and how to use analytics. In
2015, the university will marshal the resources and dollars necessary to kick off an enterprise CRM project that will include a
business intelligence and analytics platform from Blackboard Inc.
Davis says the Blackboard tools will allow Georgetown to follow students data threads while theyre enrolled as undergraduates
and after they become alumni. Well be able to leverage those data sets so we understand what our undergraduate students
are doing, what activities theyre in and who theyre networking with until they graduate, she says. When theyre out in the
worlds as alumni, the university will be able to track their careers and determine the likelihood of them giving back to the
institution, she adds.
4. Application Development
More than one-third (38%) of our respondents said that they will spend money on developing, upgrading or replacing
applications, including mobile apps. At trade show company Hargrove, Snyderwine says he plans to spend the largest chunk of
his 2015 IT budget (30%) on application development.
Customers visit the Hargrove website to order carpeting, chairs and labor for their displays, and he says its time for a refresh
of the companys three-year-old customer-facing app. Snyderwine says he wants to build new apps and upgrade others to get
more functionality and a modern Windows 8-type interface, and he will probably use a third party to do that. I need different
skill sets that I dont have in-house, so Im going to outsource a lot of that, he explains.
For its part, Cross Country Home Services, a Sunrise, Fla.-based home warranty provider, plans to increase IT spending 10%
to 15% next year as it ventures into new lines of business and the consumer channel. One of its top priorities will be developing
mobile apps for its traditional and new offerings.
For instance, the companys new total home management website, TotalProtect.com, can be used on mobile devices, but its a
different experience than using a mobile app, says CIO Joel Steigelfest. We want people to be able to enroll or initiate a claim
through their mobile device, so were doing more of that kind of investment, he explains.

5. Wireless/Mobile

Mobile spending rounds out the top five budget items for 2015 identified by respondents to the Computerworld Forecast survey.
Some 35% of the respondents said that their organizations plan to invest in RFID technology, remote access tools, Wi-Fi,
mobile/wireless devices and mobile device management systems. Theres a lot of investment around not so much the devices
now, but more on the infrastructure and custom application development, Minton says. Companies also plan to spend on
technology to support bring-your-own-device programs most notably the systems necessary to provide secure mobile access
to internal systems, he adds

Not Making the Cut

While spending will increase in some areas, it will inevitably decline in others. Hardware was the area most commonly cited as
a target of cuts in the Computerworld Forecast survey, with 24% of the respondents saying that their employers will decrease
spending on servers, desktops, laptops and other types of equipment. And with more companies thinking about outsourcing IT
operations or moving systems to the cloud, 19% of those polled said legacy systems modernization or replacement will be put
on the back burner and 16% said that they will spend less on data center consolidation and optimization
Were making concerted efforts to spend less money on on-premises infrastructure and . . . data centers, says Georgetowns
Davis. We want to leverage cloud solutions or technologies in order to find ways to be more efficient and effective.
But hardware spending isnt going away anytime soon for the majority of companies. Moving everything to the cloud is not
going to happen overnight, says Minton, who estimates that 70% to 80% of IT budgets usually go toward maintenance and
upkeep.
We think its going to take as long as a decade for the whole journey to the cloud to pan out, he explains. In fact, IDC predicts
that spending on physical hardware will rise slightly in the first half of next year before slowing down again, because the tight
budgets of recent years left many companies overdue for upgrades to their on-premises servers and storage systems.
IDC expects spending on PCs and desktops to follow the same trajectory. Were definitely going into a little bit of a resurgence
in PC shipments that will be a temporary thing and then die off by this time next year, Minton says.
Investments in on-premises software will also cool off: 15% of the Forecast survey respondents said they expected cuts in
spending on ERP and CRM systems, individual point applications, Web services and service-oriented architecture, opensource tools, operating systems, e-business software and content management tools.
There was a tie for fifth place on the list of the areas most commonly earmarked for cuts next year: 14% of the respondents said
their organizations would dial back spending on unified communications technologies, such as email, instant messaging,
telephony and videoconferencing, and another 14% said they foresee a decline in expenditures on storage, including networkattached storage and storage-area networks.
Cost Containment Still a Top Priority
Even though many of them will have more money to spend next year, 53% of the IT professionals surveyed said that containing
costs is among their top priorities. Next on the list of priorities were automating business processes (cited by 47% of the
respondents) and optimizing existing investments (cited by 44%).
For example, the police department in Charlotte, N.C., is looking to purchase body cameras for more than 1,000 officers a
big issue for police departments across the country. But body cameras require a huge investment in storage, networks,
hardware and maintenance, says Jeff Stovall, CIO of the Charlotte city government.
That level of change in investment is not going to come without a sacrifice somewhere else, says Stovall. Thats where
prioritization comes in: Whats really important to the city versus whats really important to the individual department?
Charlotte increased IT spending by 13% for the fiscal year ending June 30, 2015, but after that, the budget will probably remain
flat, Stovall explains. His primary goal for the second half of 2015 will be to drive transparency into how each city department is
spending on its own IT projects, and how that spending aligns with the citys priorities. Transparency forces prioritization
discussions at the level of the city manager, Stovall says. That is different from the stovepiped prioritization discussions of the
past.
The key is open communication, says Jason Hayman, market research manager at TEKsystems, a Hanover, Md.-based IT
services, staffing and talent management company that analyzes IT spending.

The whole C-suite needs to communicate the priorities of the organization and then decide what tools are going to be used to
meet those goals. Once an application is chosen, everyone must agree on whos in charge and how the technology will be
supported, he adds. Business units have been known to go rogue and purchase their own systems, Hayman says. And then,
all of a sudden theyre calling IT saying, This system needs to plug in with other applications, he notes. It causes back-office
issues or technical issues, and the CIO didnt even know this was going on, or budget for it.
It boils down to making sure theres transparency and communication within the business units. Executives from all areas of the
organization need to be on board and say, Here is what were going to do, here are the objectives and the applications were
going to invest in, Hayman says. [Then] the CIOs can make their best judgments.
As Snyderwine gets set to present his hefty IT budget proposal to the Hargrove executive team, he acknowledges a dose of
reality. While hed like an increase of 20%, he says, I think Ill probably come in at around 10%. But that wont dull his
optimism. Im not presenting gadgets; Im presenting use cases of what technology does for the customer and theyre
looking at the sales numbers, he says. With the right pitch, technology and sales should be able to move forward together, he
says. As we say in the trade show business: The show must go on.
And while IT leaders are finding ways to squeeze out extra budget dollars for their own innovation strategies, theres often even
more innovation spending going on outside the departments purview a growing trend in large organizations. Today, 30% of
IT spending happens outside the IT organization in large enterprises, and that figure could grow to 50% over the next few years,
says Gartner's Gordon. In many cases, business units are bypassing IT and buying technology themselves to deliver products
and services more quickly. The implications for IT departments include a loss of control over enterprise technology and perhaps
a decrease in the amount of money allocated directly to IT for innovation.
Gartner sees the rise in what some observers call shadow IT as part of a shift toward what it has dubbed bimodal IT a
moniker that conveys the idea that organizations need two speeds of IT: traditional and agile. Traditional IT is focused on strong
efficiency and safety, approval-based governance and price for performance. Agile IT, on the other hand, is focused on
supporting prototyping and iterative development, rapid delivery, continuous and process-based governance, and value to the
business.
Gartner finds that organizations are most successful when they have two modes of IT with different people, processes and
tools supporting each. Often, that duality requires spreading out IT projects throughout the business, Gordon says

Source : Computerworld.Com

Recommended By Rick Moreno, GLOBAL INFORMATION TECHNOLOGY DIRECTOR, AT&T

Network Management / Managed Services / Outsourcing / IT Infrastructure
rick.moreno2015@gmail.com
rick (dot) moreno2015 (at) gmail (dot) com
https://www.linkedin.com/pub/rick-moreno/6/79a/850