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Monday, October 08, 2007

IT Budget Agenda 2008

Spending for IT goods and services is expected to grow next year, as organizations enter a new phase of technology acquisition.  In 2008, IT will experience an 8 percent increase in spending over 2007 purchasing budgets—-that’s 3 percent more than in 2007, said Andrew Bartels, an analyst at Forrester Research, in Cambridge, Mass.  For 2008, spending patterns are expected to begin to change, as companies focus more on increasing productivity than in cutting costs.  “Forrester talks about two periods of technology acquisition, which we call ‘tech digestion’ and ‘innovation growth,’” Bartels said.

During tech digestion, acquisition is all about price and ease of use, with budgets primarily driven by return on investment calculations.

There’s a large focus on infrastructure rationalization and process automation—-pretty much what’s characterized technology acquisition for the past seven years or so.

Next year will signal a point of transition, as we’ll see a whole new level of investment for the next four or five years.  Purchases will be driven more by functionality and less by ROI calculations.  “There will be a shift from making processes more efficient to helping companies optimize business results by adding analytics and vertical industry knowledge,” said Bartels.

According to Forrester research, software spending will show the greatest increase over 2007, rising by 10 percent, fueled by the drive for greater productivity as well as the spread of virtualization software in the data center.

Communications equipment purchasing will show the greatest percentage increase (9 percent more than the 2007 budget), heavily influenced by carrier infrastructure investment.  Communications equipment purchasing by enterprises will be more modest, growing at 6 percent more than 2007 budgets.

The budgets for computer equipment will show a slightly lower growth, at 4 percent, than it did in 2007, while budgets for IT services and outsourcing will jump by 8 percent.

Discussions with industry analysts and IT professionals indicate that terms such as “security” and “disaster recovery” still have a place on IT’s agenda, but moving up fast are terms including “green IT,” “data analytics” and “knowledge transfer.”

This latter term is particularly important: The increasing mobility of workers means that organizations suffer when individuals take their knowledge and intelligence with them.

Web 2.0 technologies, such as wikis, blogs, and enterprise tagging and bookmarking systems, are being looked at as one approach for capturing that intelligence.  “Learning in major organizations is just repeated constantly,” said Keely Flint, enterprise information architecture program manager, at Bupa Health, based in the United Kingdom.  “We developed a library of use cases so that people might come to a central repository to trigger ideas for new projects or gain guidance for existing projects.”  The vice president of IT at Fuji Film, in Valhalla, N.Y., said he’s automated pretty much everything that can be automated.  Next year he’ll start using Microsoft’s SharePoint platform for collecting latent information in the organization.  “We have intranets and our internal Web sites, but everybody has their drawers stuffed with information, so the idea is to promote the use of SharePoint as a common platform,” Pelligrino said.

Pelligrino added that some of these technologies don’t have obvious ROI.

GE Real Estate’s IT budget is expected to increase by 3 percent to 5 percent next year, according to CIO Hank Zupnick, and a major business priority for the company, a business unit of GE Commercial Finance, is electronic content management for providing easy access to business documents such as tenant leases and third-party vendor contracts.

These tools include a case management system for the county’s mental health facility and an expanded point-of-sale system at the county’s amusement park, Rye Playland, said Westchester County CIO Norm Jacknis.

Data center reorganization and consolidation continue to be major projects for many companies, driving investments in virtualization, storage, blade servers and more effective management tools.

As part of that effort, GE Real Estate is deploying WAFS (wide-area file services) in 30 North American regional offices in place of traditional file and print servers, with “significant success,” Zupnick said.

During 2006 and 2007, Fuji Film rolled out most of its SAP implementation and put into place much of the necessary infrastructure for the platform.

A safer answer may be the “verticalization” of broad-based applications: the process of applying industry knowledge to mined data, allowing companies to gain deeper insight into their businesses.

http://www.eweek.com/print_article2/0,1217,a=216693,00.asp

Posted on 10/08
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