Ovum: IT spending improves but companies still holding off

IT spending is improving but it falls short of the growth experienced before the global financial crisis, according to an analyst firm.

The Ovum Global IT expenditure report shows 32 per cent of Australian business respondents are looking to increase IT spending and a majority of them will boost expenditure by about five per cent. While this is a better result in comparison to last year, it is lower than figures posted in 2007 when organisations were spent upwards of seven per cent.

About 38 per cent of companies are settling on holding off spending while 30 per cent will decrease their IT expenditure.

Principal IT analyst, Jens Butler, said the global financial crisis experienced between 2008-2009 had spooked businesses into being more austere with their wallets.

“Actual spending will be more difficult to access,” he said. “One of the things the GFC has taught organisations is to put far more business focus on getting access to its services, hardware and so on; it’s almost like an additional hurdle has been put in place to justify and facilitate [IT spending].

“Things will pick up again but spending will be more specific and well thought out rather than to splurge on a project.” Bulter expects numbers to catch up to previous levels by 2011-2012.

He said IT services expenditure is trumping traditional hardware and software spend with consulting work becoming popular with organisations seeking advice on how to grow their IT infrastructure.

“A lot of businesses we have spoken too have plans to do Windows 7 refresh implementation and will potentially buy hardware components associated with that,” Butler said. “But the majority of them are looking for service providers to give them what they want, such as outsourcing, applications management and development as well as physical integration work.”

IT resellers and providers should expand into consulting, flexible service offerings and adjustable payment terms to take advantage of the slight spending recovery, he said.

“More cloud computing is coming to play and many service providers and system integrators are wrapping up offerings in that space," Butler said.

“Resellers and service providers shouldn’t try to be everything to everyone, but focus on competencies instead.”

About 1400 companies participated in the Ovum survey of which 10 per cent were from Australia.

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