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IDC: Technology Purchases from Line of Business Budgets Forecast to Grow Faster Than Purchases Funded by the IT Organization
A new update to the Worldwide Semiannual IT Spending Guide: Line of Business from the International Data Corporation (IDC) forecasts worldwide corporate IT spending funded by non-IT business units will reach $609 billion in 2017, an increase of 5.9% over 2016. The Spending Guide, which quantifies the purchasing power of line of business (LoB) technology buyers by providing a detailed examination of where the funding for a variety of IT purchases originates, also forecasts LoB spending to achieve a compound annual growth rate (CAGR) of 5.9% over the 2015-2020 forecast period. In comparison, technology spending by IT buyers is forecast to have a five-year CAGR of 2.3%. By 2020, IDC expects LoB technology spending to be nearly equal to that of the IT organization.
IDC's Line of Business taxonomy identifies two major types of technology spending – purchases funded by the IT organization and purchases funded by technology buyers outside of IT. Joint purchases can be funded by either IT or the functional business unit while "shadow IT" projects are funded from the functional area budget without the knowledge, involvement, or support of the IT department. Although some technology categories are dominated by IT spending, most involve outlays from both IT and the business units. For example, worldwide IT spending on servers, storage, and network equipment is forecast to total $114.1 billion this year, while LoB spending on these items will total $52.9 billion. However, IT is not the primary source of funding for all hardware purchases. Business unit spending on PCs, monitors, mobile phones, printers, and tablets will total $83.8 billion worldwide this year compared to $76.2 billion spent by the IT department. And line of business buyers will spend more on software applications in 2017 ($150.7 billion) than IT buyers ($64.7 billion).
The technology categories that will see the most spending from LoB buyers in 2017 will be applications ($150.7 billion), project-oriented services ($120.3 billion), and outsourcing ($70.3 billion). The categories that will receive the most spending from IT buyers this year will be outsourcing ($149.2 billion), project-oriented services ($82.2 billion), and support and training ($79.8 billion). Combined IT-LoB purchases of outsourcing and project-oriented services ($422 billion) will represent nearly one third of all technology spending worldwide in 2017. The technology categories that will see the fastest growth in spending over the 2015-2020 forecast period are tablets (16.2% CAGR for IT and LoB purchases combined) and midrange enterprise servers (14.7% combined CAGR). LoB buyers will also continue to invest aggressively in applications and application development and deployment (8.5% and 9.3% CAGRs, respectively).
According to new research from the 2016 Aspect Consumer Experience Index, the desire for automated interaction is real. Forty-four percent of the respondents to the company’s annual survey said that if a company could get it right they would prefer to use a chatbot or an automated assistant for customer service interaction, up 4 points from the 2015 survey. Half of them said that they would rather conduct all brand interaction via text/messaging, with 39 percent saying the digital-first methods are more effective than talking.
A key survey finding is that brands that deliver automation in isolation risk alienating customers. An overwhelming number of consumers (88 percent) expect the context of their interaction on a chatbot to follow them as they transition to a live person. Delivering on this is essential because a good number of respondents think automated assistance will end up giving them the same frustrating experience that antiquated Interactive Voice Response solutions did.A chatbot experience, broadly defined as a self-service experience, creates good will with customers. Sixty-One percent said chatbots will allow simple to moderate requests to be handled faster. But more importantly, Two-thirds of consumers said they feel good about themselves and the company when they are able to answer a question or solve a problem by themselves without the help of a customer service agent.
Survey Unveils Results of CIO Survey: 80 Percent Planning Big Data Projects in 2017
The survey reveals that while the push toward digital transformation continues to be a focus, CIOs are also being challenged to spend both time and budget maintaining day-to-day business operations. As a result, their focus for the year ahead is split between technology advancement and “keeping the lights on.
The most notable CIO insights revealed by the survey include:
Big Data Projects are on the Rise: Enterprise organizations have reached a new level of comfort with big data, with just over 80 percent of respondents indicating they have plans for at least one big data initiative in 2017, which is almost double the number of completed big data projects in 2016. Focus areas for 2017 initiatives include big data analytics and customer-360 initiatives.
Real-Time Analytics is Top Priority: Twenty-six percent of respondents noted real-time analytics as their top priority for 2017. Metadata management was a close second at 20 percent, and self-service data preparation was a priority for 18 percent of respondents. While AI/Machine learning and Internet of Things (IoT) are on the radar of many CIOs, they rank much lower in importance, garnering only 10 percent and five percent of votes respectively.
Big Data is Most Often Used to Drive Internal Process Improvements and Advance Customer Service: The job of any IT leader is often split between introducing new technologies to improve the business and keeping everything running securely and cost effectively. This may explain why 27 percent of respondents noted the most valuable impact big data has made on their organization is helping improve internal processes. This was followed closely by improved customer service (20 percent), reducing operating costs (17 percent), and creating new revenue streams (17 percent).
IT/Business Relationship is Biggest Hurdle to Becoming Data-Driven: Thirty-five percent of survey respondents noted their biggest challenge to becoming data-driven was the relationship between IT and the business. Notably, this relationship gap was more of an obstacle than either budget (23 percent) or having suitable skills, which was only seen as a challenge by 16 percent of respondents.
Data Governance, Quality and Self-Service Trouble IT: When asked which of the following was the highest priority for their organization, IT decision makers showed a fairly-even split between data governance (37 percent), data quality (33 percent) and self-service (31 percent). These results highlight the pressure felt by organizations to ensure data is clean, managed and widely accessible so employees can leverage it for business success.
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To Team or Not to Team? That is the Question
Extreme Teams: Why Pixar, Netflix, Airbnb, and Other Cutting-Edge Companies Succeed Where Most Fail
Extreme Teams looks at the new generation of teams driving growth in today's most innovative firms. They do this by tossing conventional wisdom and doing things differently. The book takes you inside these bold companies and examines the teamwork experiments powering their results, including how:
Times change, and so must teams. Designing and managing high-performance teams requires upgrading outdated beliefs and behaviors, and creating in your company the level of intensity and collaboration needed to face down any challenge.
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