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: