IT budgets to rise by 3% in 2014 as companies step up spending on mobile

IT spending will increase by 3% in 2014, up from 1.8% last year. But shadow IT spending will add another 40% to technology budgets

IT departments are set to increase their spending by 3% in 2014 as confidence in the economy returns, a major study of 165 organisations with an IT spending power of £29bn has revealed.

The increase, up from 1.8% last year, reflects recovering economic conditions around the world, claimed CEB (formerly the Corporate Executive Board), the member-based advisory group which conducted the research.

Real spending levels on technology are likely to be much higher, however, with technology investments by parts of the business outside of IT equivalent to an extra 40% on the IT budget.

Mobile spending up

IT departments are stepping up their spending on making their business applications accessible from mobile phone and tablets.

The proportion of companies spending more than 4% of their IT budgets on mobile applications is expected to reach 15% by 2014, up from 4% two years ago.

The findings reflect the growing need for businesses to equip their employees with mobile technology, at a time when 65% of employees say they are dissatisfied with the mobile capabilities available to them at work.

At the same time, companies are investing in technology to make it easier for their customers to interact with their websites using tablets and smartphones.

“Increasingly now from the start, mobile web is treated as one of the channels, and developed in parallel with or before the desktop version," said CEB managing director Andrew Horne.

Cloud migration gaining pace

Investment in cloud computing is also rising steadily, the research revealed.

By 2014, the proportion of businesses spending more 4% of their IT budgets on software as a service (SaaS) is expected to reach 24%, up from just 8% in 2012.

And by 2014, an estimated 20% of organisations will spend more than 4% of their IT budgets on infrastructure as a service (IaaS), up from 13% in 2012.

Productivity technology is doing less well

However, IT departments are struggling to find resources to invest in technologies to make employees more productive, the research revealed.

Some 95% of organisations say they have plans to invest in tools such as collaboration technology and analytics to improve the productivity of their workers. But only 10% say they have realised their objective.

“These investments are harder to build a business case around. We believe they are the most important, but quite a few companies are tied up in the business case process where nothing gets investment unless you can show in concrete terms what its value is,” said Horne.

The survey suggests that other parts of the business are picking up the slack by developing their own innovative IT projects, creating a "shadow IT budget" worth equivalent to another 40% on the IT departmental budget.

Staff levels to remain constant

Staffing levels in the IT department will remain constant during 2014, but the mixture of roles is likely to change, the research predicts.

“We are seeing more roles at a governance and management level, but also more diverse roles and the emergence of roles that were quite rare a few years ago,” said Horne.

The number of operational roles, for example for developers and network administrators, will diminish over time.

But new roles will emerge for service managers and user experience designers as companies attempt to make their IT systems more user friendly.

CIOs cautious

Overall, CIOs are taking a cautious approach to capital investments by the IT department in 2014, with most organisations predicting a 0.3% growth.

Companies are likely to increase their capital spending over the course of the year, however, as new business needs become clear, said Horne.

In 2012, for example, 29% of companies predicted they would increase their capital spending on IT by more than 5% during the year. In practice, nearly 60% did so, as new business needs became apparent.

“We have seen a healthy increase at the end of the year from what people predict at the start of the year. There is a culture of being cautious early on,” said Horne.

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