Analytics, IT security and cloud among top areas for IT investment
Of all the statistics tracked by the Society for Information Management’s (SIM) IT Trends Study, its ranking of the largest IT investments gives the most insight into the direction of IT in the coming years.
Launched in 1980, the annual SIM IT Trends Study surveys over 1,200 IT leaders (including 490 CIOs) and tracks everything from IT spending as a percentage of revenue to changes in the average IT salary, but its ranking of IT investments not only reveals the IT priorities of CIOs, but also the priorities of the entire C-suite.
According to Russell Torres, a business analytics professor at the University of Texas at Dallas and a co-author for the SIM IT Trends Study, he and his co-authors compile the list by asking survey participants to list their largest current or near-term IT investments.
"We don’t really limit it in any specific way,” Torres explained in an interview. “We give them some flexibility to interpret as they will, but by and large most people approaching this question are likely to be focused on where they’re going in the next two to five years.”
So where are IT departments heading in the next half decade? Here are the top five largest IT investments, according to the study:
Business analytics not only tops the list of IT investments, but it also ranks first on the list of departments that executives think deserve even more investment. It has also, according to Torres, ranked as one of the highest investments for a longer period of time than any other item. “This topic area has been number one on this investor list for the last eight years, and it’s been in the top three for well over a decade now,” he said. “Even other technologies that had huge interests for long periods of time — ERP comes to mind — didn’t see this level of stability at that top spot.”
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Torres explained that the competition to hire the best talent is what’s driving much of the spending on business analytics. “If you look at business analytics programs, particularly at the graduate level, these are springing up all over the place at colleges and universities,” he said. “Schools are taking what they used to call business statistics, decision sciences, and management science and they’re rebranding those things as ‘analytics.’ In part it’s to give people who come through those programs an edge when it comes to entering the job market.”
Custom software development
Given the large shifts to cloud technology in recent years, you might be scratching your head trying to figure out why customer software development is the second largest IT investment. After all, wasn’t cloud computing supposed to eliminate the expense of software development as companies embraced SaaS and best-of-breed technologies?
Torres said that he and the SIM IT Trends Study team had this exact same thought, so they recently began asking a follow-up question to determine what kind of software development was eating up IT resources.
“If you look at the responses, they basically suggest that the majority of that money is going toward integration,” Torres said. “I suspect that a lot of that comes down to integration with the cloud.” As companies transition to cloud-based technologies, they spend heavily on custom configurations and ensuring applications work in conjunction with each other.
Cybersecurity is one of those paradoxical categories in which the more you spend on it, the less likely you are to see any tangible results from it. That’s because if cybersecurity is done right, then absolutely nothing happens. Because of this paradox, IT leaders have traditionally struggled to convince the C-suite to provide adequate investments in cybersecurity, but that’s all starting to change. High profile data breaches at companies like Target and Yahoo have forced executives to recognize the potential consequences.
“The fact that we are now starting to allocate those funds means it’s gone just beyond the primary worry of the CIO and it’s become a concern for the business as a whole,” said Torres. “There’s recognition that if cybersecurity fails us, it’s not just an IT problem anymore, that’s a business problem, and it’s going to not only cost us customers, but it’s also going to cost us money in the form of recompense to those whose data we’ve lost.”
Though cloud computing is among the top IT investments, one might be surprised that it’s not higher on the list. Torres said the fact that it isn’t may be indicative that the oft-cited benefits of cloud computing — that it’s much more efficient and scalable — are actually true. “There’s huge competition out there in the cloud market, and so that competition is very likely to drive down the cost of those cloud-based services,” he explained. “It may be that businesses are just moving as many applications and services to the cloud as they have in the past, but those services and applications are costing them even less.”
Though CRM has been widely-used by Fortune 500 companies for decades, the CRM market is expanding rapidly as CRM software companies seek to penetrate the market for small-to-medium-sized businesses. Saturation of the Fortune 500 combined with the expansion of cloud computing has resulted in companies — ranging from Microsoft to Salesforce — competing aggressively to serve these smaller businesses.
“If you look at the history of this particular item, it’s been in the top 10 largest IT investments since 2010, and I think that really reflects how important those relationships with the customer are,” said Torres. “There are also some interesting synergies between CRM and other things on the list. Your CRM is there to collect and manage customer data, and that directly relates to the importance of cybersecurity and keeping that data safe. It also directly relates to analytics and the ability to harness that data to achieve valuable business insights.”