Clear business value drives firms' spending on CRM and
ERP systems
Spending on major enterprise software implementations will grow by
20% in 2005, according to the latest Computer Weekly UK IT
Expenditure Report, produced by Kew Associates.
Investment in enterprise resource planning applications will grow
by 21% and customer relationship management software and services
by 20%, according to Kris Wicka, director at Kew Associates.
E-commerce investment is set to grow by 24%, security spending by
15% and storage spending by 8%. This growth will come off the back
of a slight downturn in spending by IT departments in the last
quarter of 2004, down to 5.4% from 7.3% in the third quarter of
last year.
"The deceleration was consistent with slippage in economic growth,"
said Wicka. "There are some dramatic growth areas in IT spending,
but I do not see overall IT spend shifting much over 5% between now
and 2009. IT spending is very closely coupled with the growth of
the economy."
The increase in IT spending will continue to be driven by services
including outsourcing, said Wicka. Overall spending on hardware is
set to decline. Firms will continue to invest in servers, networks,
PCs and storage, but overall spending will not rise as products
become commodified.
IT directors surveyed in public and private sector organisations in
66 sectors said pressure from the business to cut costs and deliver
a quick return on IT projects was driving investment.
Ben Booth, chief information officer at research company Mori,
said, "I think we are getting new money where it is seen to bring
business value. However, as the trend is more towards business-led
projects with an IT component, the money may not be easily
identified as 'IT'. We are still under pressure to reduce base
costs, but we may be spending more where there is a business
driver."
Owen Williams, head of IT at property firm Knight Frank, said,
"There is still pressure to reduce costs. We are identifying our
running costs separately from development costs to demonstrate that
operational costs are controlled and additional effort and money is
available for business enhancement projects."
The analysis of the Computer Weekly UK IT Expenditure Survey,
produced by Kew Associates, is available this month for £2,500. For
more information, e-mail:
georgina.tucker@rbi.co.uk
