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Big business steps up IT spending despite downturn

Bill Goodwin

Large businesses are stepping up their spending on IT following a period of cost cutting during the financial crisis, according to Deloitte’s IT consulting practice.

Although cost-cutting is still a priority, businesses are diverting resources into IT as they strive to keep up to date with technology, said Kevin Walsh, technology consulting leader.

Deloitte said its clients are stepping up their IT spending after putting projects on the back-burner over the past year and half.

“The last 18 months have been about cost cutting and IT efficiency. The theme with our clients was reducing IT spending,” he said. “People have now realised their technology is moving at quite a pace, we are seeing a clear return to using IT to differentiate business programmes.”

Deloitte, which advises FTSE 100 and 250 companies on major IT projects, identifies online retailing, social media and regulation among the main drivers for raising IT spending.

Retailers are investing in technology that will integrate online with traditional sales channels, for example to allow consumers to order online but pick up in-store.

The insurance industry has stepped up investment in technology to meet the requirements of Solvency II regulations.

Businesses across the board are investing in data analytics.

“There is definitely a focus on spending more on analytics, exploiting the information you have, whether it be financial services or retail, ” Walsh said.

Large projects started in 2011 will continue in 2012, leading to a continued upturn in IT spending next year, Deloitte predicts.

However, 2012 will not be an easy year for CIOs, said Mark Lillie, partner lead for IT strategy.

The rest of the business is more technology savvy and expects the IT department to supply technology more rapidly than ever before.

Suppliers are bypassing the IT department, and persuading other parts of the business to sign up to cloud services, such as Salesforce.com, directly.

Company executives are demanding more agile deployments of IT, with rapid returns on investment, Lillie said.

“There is an increased rigour. Big projects are back in but there is absolutely a focus on the business case and delivering quickly,” he said.

As a result, businesses are increasingly combining agile with traditional project management techniques, in an attempt to reduce project lead times.

“We are seeing an increasingly agile and savvy business, looking at how to combine the best of agile techniques to bring in the benefits quickly in the most costs effective way,” said Walsh.


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