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Recession Puts Brakes on IT Spend
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Global IT spend is expected to reach US$2.7 trillion by the end of 2012 -- a rise of 3.9 percent on the previous twelve months. However, the increase falls short of earlier predictions, suggesting that the return to recession in many parts of the world is hitting technology budgets, as businesses across the globe look to curtail their spending.
According to KPMG's latest Technology Issues Monitor, earlier forecasts of a 5.9 percent growth rate fall wide of the mark because of the weak European economy, and natural disasters in Thailand affecting the global supply chain for computer and storage equipment.
The report suggests that 4 major technology sectors -- computing hardware, enterprise software, IT services and telecoms equipment -- are expected to be the worst affected. Of these, IT services is predicted to grow by just 3.1 percent, a figure which is less than half the growth experienced in 2011 (6.9 percent).
Mac Scott, associate director within KPMG's CIO Advisory team, says: "With factory output falling and economic sentiment weakening, initial views about the industry's growth pattern are being hastily revised. The second recession is beginning to hit and CIOs must now decide which way to turn. The questions they must ask revolve around whether they have the right processes in place and what value they can squeeze out of existing arrangements."
The pattern in developed countries is not, however, completely mirrored in the developing world. KPMG's analysis of IT spend across the globe suggests that emerging economies such as Malaysia, India and China are experiencing a rapid growth in demand for improved supply chain management and innovation in business, resulting in organisations turning to IT for an answer. The data quoted within KPMG's report reveals, for example, that Malaysia's enterprise IT spend is expected to grow 6.1 percent in 2012 to approximately $10 billion. India, long-regarded as an emerging IT and economic growth area is predicted to see organisational IT spending reach $39 billion, a year-on-year growth of 10.3 percent.
It is also clear from KPMG's Technology Issues Monitor that business analytics, cloud computing and enterprise mobility will be the three key trends keeping IT spend afloat in the coming months. However, how IT budgets are allocated will no longer be the sole domain of CIOs, with many organisations turning to their marketing teams for advice on how to retain customer loyalty through improved CRM programmes.
Scott concludes: "With the convergence of marketing and IT, marketing professionals will gradually hold more influence around how, where and why IT budgets are spent. Simply because marketing and IT teams depend on quality data, slick processes and stable software, chief marketing and chief information officers will increasingly need to form strategic partnerships. Their cross-functional collaboration could well be the key to help companies create efficiencies, improve workflows and reduce costs."
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