This year is shaping up to be either a bullish or a sluggish year when it comes to IT spending and the difference may depend on the size of the organization making the prediction, according to new research.
In its study, IT Spending and Staffing Outlook for 2016: Divergence Ahead, Computer Economics reports that “As they make
budget plans for 2016, IT organizations in the U.S. and Canada are of two minds. Some IT organizations are bullish about the future and even forecasting a revival in IT capital spending. Others, particularly larger ones, anticipate no growth in their budgets and appear to be hunkering down.”
The Irvine, CA research firm forecasts that IT operational budgets will grow about 2.0% at the median. While still positive, Computer Economics notes that the growth rate is slowing from the rate of improvement over the previous four years. IT security and analytics still dominate when it comes to spending priorities, trends confirmed by a number of recent studies.
There is also good news in the report.
“Our outlook study also finds that IT capital spending appears ready to stage a comeback from its recessionary doldrums, and more than one IT executive reports that business leaders are stepping forward to drive demand for innovation and investment.
"The company has invested in IT as an investment for growth and market differentiation," an IT director for an insurance company comments in the study.
Which outlook is correct? On the surface, the firm’s top-line projections for IT operational spending, IT capital spending, and IT staffing for 2016 look similar to the slowly reviving pace of the past three years, notes John Longwell, vice president of research at Computer Economics. Below the surface, however, this year looks markedly different, he says.
“There is a distinct divergence between the haves and the have-nots,” Longwell explains. “Small and midsize organizations -- particularly those in the financial, professional, and technical services markets -- are aggressive in their forecasts for IT operational spending. Perhaps even more upbeat, small companies intend to increase IT capital budgets by a substantial margin, a jump in growth-oriented IT investment that has been absent for some time.”
"Investment in technology is tied to business growth, and we are poised to grow in coming years," a CIO for a marketing services company commented in the study.
In sharp contrast to the outlook for smaller services companies, large organizations -- particularly those in the manufacturing sector -- are clamping down on IT investments, Longwell says. Several IT executives lamented that despite rising demand for IT services, they are being asked to maintain the status quo on spending.
"Our IT budget is facing an expectation that it has to decrease," wrote a development manager with a large health insurer. "However, we fully understand that we have to invest in new areas, so cost-cutting measures will be taken in areas where they can be found."
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