IT budgets to stay flat next year

IT budgets will remain flat due to post-recession ‘recovery’ spending, a new report has suggested.

According to the latest budget forecasts from CEB,  CIOs plan to allocate roughly 30 percent of total IT spending next year on business opportunities. However, innovation will account for only eight percent.

Its IT Budget Benchmark Report, which is based on CIO forecasts in more than 200 global companies, representing over £32 billion in IT spending, the member-based advisory firm said that CIOs would expect a modest growth in IT expenditure with an increase by only 1.8 percent. It said this was roughly half than 2012.

Operational expenditure was predicted to rise by 70 percent in 2013, while capital expenditure growth would stay flat.

Despite CIOs’ efforts to reduce maintenance and mandatory spending, the report also found that this technology continued to represent nearly 70 percent of total IT expenditure.

It said this allocation had held stable over the past several years and was projected to remain constant through 2013.

However, technologies were getting more attention with the board finding that CIOs plan to increase spending on mobile applications in 2013, ensuring all applications are ready for the mobile environment, fitting into a broader trend in mobile spending across the globe.

It added that it was also seeing a growing migration to the cloud, as 54 percent of organisations planned to increase spending in this area. Almost half of this cloud spending will be spent on Software-as-a-Service (SaaS).

Andrew Horne, managing director for CEB, said that at the moment over two thirds of IT budgets in 2013 were already allocated to maintenance and regulatory compliance, which he described as “essentially ‘keeping the lights on”, before a single new project could be started.

He said this meant that the ability of companies to be innovative and set themselves apart from their competitors “would be challenging.”

“This increase in operation spend is in part a knock-on effect from high levels of spending prior to the spending of 2010 and 2011, meaning that CIOs are seeing any budget increases absorbed by the need to keep existing capabilities going,” he added.