Understanding IT budget trends H1 2007 (Customer Focus)

Introduction

Datamonitor's Technology Trends survey of 500 enterprises in H1 2007 reveals that the majority of IT budgets are increasing or remaining flat. This brief discusses these trends as well as discovering how enterprises' IT budgets are spent. The brief contains an analysis of the factors that motivate IT investment strategies and the type of provider that enterprises prefer.

Report Highlights
Highlights

Looking at IT budget changes by country provides some interesting differences: enterprises in Spain, Italy and Benelux have either made increases to their IT budgets in the last year or are planning to increase their IT budgets next year. Spanish and Italian enterprises tend to follow similar paths with regard to their technology purchasing habits. The proportion of enterprises' IT budgets spent on hardware and software remains significant. The cost of hardware and the importance of having reliable systems and infrastructure explain this continuing trend. Services and consulting remain a lower priority for enterprises due to the preference for internal management and expertise. The in-house team is most likely to be the first choice for addressing IT needs: it's easier for enterprises to communicate with them and usually cheaper than using external providers. However, in many instances, the in-house team may not be able to provide the support an organization needs due to a lack of specific expertise or limited resources.
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TABLE OF CONTENTS
DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
The majority of enterprises' IT budgets will remain the same or increase in the coming year 2
A relatively high percentage of enterprises' IT budgets have grown since 2006-2007 2
A larger proportion of enterprises' IT budgets will remain flat in 2007-2008 3
There are distinct differences in IT budget size by vertical sector 4
Financial services institutions are likely to have larger IT budgets 4
IT budget growth varies by industry and geography 6
Enterprises in financial markets and the energy industry are most likely to increase their IT budgets 6
A large proportion of enterprises in Italy and Benelux are planning to increase their IT budgets next year 7
Hardware and software expenditure make up the majority of enterprises' IT budgets 9
Hardware is still the largest area of expenditure in enterprises' IT budgets 9
Spend on hardware appears to be decreasing while spend on software and services is gradually increasing 10
There are variations in IT budget allocation by geography 12
Improving customer satisfaction is the key objective for enterprises' IT strategies 14
Enterprises' IT investment strategies are fuelled by improving customer satisfaction. 14
Standardization and simplifying systems are top priorities for enterprises 15
Outsourcing and offshoring are a lower priority 15
Enterprises are most likely to approach their in-house team first to address their IT needs 17
The majority of enterprises would use an in-house team as their first choice for their IT needs 17
Italian enterprises are more likely to approach a technology vendor as their first choice 18
Enterprises tend to spend the largest proportion of their IT budget on internal development 19
SUMMARY 21
Enterprises will continue to invest in technology driven by improving customer service 21
APPENDIX 22
Additional Demographic Information 22
Definitions 23
Methodology 23
Further reading 23
Ask the analyst 24
Datamonitor consulting 24
Disclaimer 24
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Table 1: How has your IT budget grown or shrunk from 2006-7, how do you expect it to change in 2007-8? 3
Table 2: How has your IT budget grown or shrunk from 2006-7, and how do you expect it to change from 2007-8? 4
Table 3: What is your estimated 2007 IT budget to the nearest $m? 5
Table 4: How do you expect your IT budget to change in 2007-8? 7
Table 5: Has your IT budget grown from 2006-7, and how do you expect it to increase in 2007-8? 8
Table 6: How are you spending your (external) IT budget in 2007? How will it change in 2008? 10
Table 7: How are you spending your (external) IT budget this year? 11
Table 8: How are you spending your (external) IT budget in 2007? 13
Table 9: Please rate the importance of the following objectives to your IT investment strategy in 2007 15
Table 10: What are your major strategic goals for 2007? 16
Table 11: Which type of provider are you most likely to approach first to address your organization's IT needs? 17
Table 12: Which type of provider are you most likely to approach first to address your organization's IT needs? 19
Table 13: With whom are you spending your IT budget in 2007? 20
Table 14: What is your estimated 2007 IT budget to the nearest $m? 22

Figure 1: The majority of enterprises' IT budgets have stayed flat or increased slightly 2
Figure 2: 2007-2008 will see a larger proportion of IT budgets remaining flat 3
Figure 3: Financial services institutions have far larger IT budgets than those in the government sector 5
Figure 4: A majority of enterprises' IT budgets in energy/utilities and financial markets are set to grow 6
Figure 5: A high proportion of Italian enterprises expect their IT budgets to increase in 2007-2008 8
Figure 6: A large proportion of enterprises' IT budgets is spend on hardware and software 9
Figure 7: Enterprises are spending slightly less on hardware and more on software and services 11
Figure 8: Enterprises in Australia spend the greatest part of their IT budget on hardware 13
Figure 9: Increasing customer satisfaction and raising efficiency are the main objectives from IT investments 14
Figure 10: Standardizing and simplification are viewed as major strategic goals 16
Figure 11: Enterprises will use an in-house team as a first choice to address their organization's IT needs 17
Figure 12: Enterprises would all use their in-house team as a first choice with the exception of those in Italy 18
Figure 13: Internal spending comprises the largest proportion of enterprises' IT budgets 20
Figure 14: IT budget variations for the survey sample by geography 22
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