If spending more on technology is supposed to reduce a company's operational spend and increase its bottom line, then no-one appears to have told Australia's largest corporates. According to a study conducted by research company East & Partners, a staggering 29.1 per cent of the country's top 500 companies said they experienced negative returns on their technology investments over the past three years.
This figure flies in the face of the IT industry's contemporary focus on generating a tangible financial return on increased technology investment. What's more, a further 29.1 per cent of top corporates said they only received 0-10 per cent returns on technology investments in the past three years.
Even more worrying, according to Paul Dowling, East & Partners principal analyst, is that 13.2 per cent of the 447 companies surveyed for the report "don't know, or don't measure" if they have generated any return on their IT investments.
"Thirteen per cent of companies see IT spend as a black hole," said Dowling. "It's no wonder Boards are taking a microscope to their IS departments."
Dowling conceded, however, that "across the whole market, technology investments on average are returning around 10 per cent, which is pretty ordinary".
Despite the damning results, slightly more than 10 per cent of companies appear to be leveraging technology investments to drive business and fiscal returns. Those corporates reported a 26-50 per cent fiscal return on their technology spend.
Corporates want IT greens before dessertHot on the agenda for corporate Australia is business process re-engineering, development of custom applications, and dealing with existing e-commerce and CRM (customer relationship management) applications, according to the East & Partners report. Areas that are not high on the list of intended investments within the next 12 months are voice-over-IP, wireless messaging and security.
The report found that 40 per cent of Australia's top 500 corporates will be investing in CRM in the coming year. "That's not to say it's a hot button," said Dowling. "Anecdotally, there was a lot of talk that this was a problem area, a negative focus."
Dowling said that while enterprises are looking to spend a significant amount on CRM infrastructure, this is largely due to overcoming shortfalls in their existing systems. Similarly, 29.8 per cent of large companies said they are looking to spend significantly on e-commerce applications to leverage already considerable investments in the field.
Custom application development rated as a high priority, with 31.1 per cent of companies looking to invest in this area in the next 12 months. Dowling said that although custom applications have waned in popularity in the past few years, it presents a real opportunity for channel companies with skills in software development.
Interestingly, only 9.4 per cent and 8.1 per cent of companies are looking to invest significantly in VoIP and wireless messaging, respectively. "Relative [to major planned investment], neither are on the radar."
Although Dowling admits that corporates would consider security integral to all investments, security as an investment focus did not register as a top three investment area in the East & Partners report.
"As a standalone investment area for these corporates, it's a non-event," he said.