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IT Spending Expected to Accelerate Next Year, After Emerging Markets Slowdown in 2013

According to the new International Data Corporation (IDC) Worldwide Black Book (Doc #244215) just released, worldwide IT spending is expected to accelerate next year after dipping to its slowest pace of growth since the financial crisis in 2013. Overall tech spending is on course to increase by 4% this year at constant currency, reaching $2.04 trillion, down from last year’s growth of 5% due mainly to the slowdown in key emerging markets including China and Russia. IDC forecasts that in 2014, a rebound in China and continued momentum in the US and Europe will see a return to overall industry growth of more than 5% (reaching $2.14 trillion).

  • Smartphones Still Driving Growth, but Infrastructure Set for Recovery

  • In fact, almost half of this year’s industry growth is due to continued strength in smartphone and tablet shipments. Excluding mobile phones, IT spending will increase by only 2.6% this year at constant currency (just 0.7% in US dollar terms, based on year-to-date exchange rates). Enterprise IT spending in many regions has been tepid since last year, with weaker spending on PCs, servers and storage than previously expected. Tentative signs of stability in commercial PC shipments during Q3, however, may foreshadow the gradual recovery in enterprise infrastructure investment which we expect to unfold in the next 12-18 months as a broad-based capital spending cycle kicks into gear. Spending on servers, storage and enterprise networks will increase by just 1% in 2013 before accelerating to growth of 4% next year.

  • US Market Is Resilient, Despite Politics

  • While the US is on course to post IT spending growth of 5% this year, this translates into just 3% excluding mobile phones. Enterprise spending in the US has been relatively resilient, given the ongoing political volatility, but spending on PCs and servers will decline this year while storage investment is flat. Both the storage and server markets in the US are expected to improve in 2014, but PC spending is likely to remain weak in spite of signs of stability in Q3 as tablet cannibalization continues at lower price points.

  • Europe and Japan Have Stabilized

  • Market conditions are gradually improving in Western Europe, where overall IT spending is on course for growth of 2% this year (1% excluding phones), and where economic momentum has taken a turn for the better in many countries. We assume that this gradual recovery will continue next year, translating into IT spending growth of 3% driven mainly by strengthening sales of commercial software. This year has also seen a moderate improvement in Japan, driven by the government’s short-term policy initiatives; while IT spending is on course to be flat in 2013 (0% growth), this marks an improvement from our previous forecast of a 1% decline.

  • China Will Rebound in 2014

  • IDC forecasts that IT demand will accelerate in China next year, in line with our expectation that macroeconomic growth and business confidence will improve. In China, overall IT spending is on course to increase by just 8% this year, the weakest pace of growth since 2008; next year, we forecast an acceleration of growth to 14% led by strengthening sales of PCs, servers, storage, software and IT services. Growth in India will remain broadly strong, driven mainly by smartphones and tablets, but we expect a slowdown in PC sales after state-level government initiatives helped to drive strong growth in 2013, while there are also signs of weakening growth in other sectors. A gradual deceleration in tech spending is also emerging in Brazil, while in Russia the economic slowdown has driven overall industry growth to just 1% this year (from 15% in 2012). We forecast a rebound in Russia to 10% growth next year, driven by smartphones, software and services.
    [Full Article]   Nov-17-2013


    IT Budgets, Headcount Set To Grow in 2014

    A majority of IT leaders are reporting modest growth in budgets, salaries and headcount, according to the latest survey data from the Society for Information Management (SIM).

    Companies are still concerned about the economy, but that hasn’t stopped them from funneling more of their revenue to the IT department this year than they did in recent years, SIM reports. In 2013, the average IT budget was 4.95% of corporate revenue. That’s only a marginal increase from 4.94% in 2012, but it’s a full percentage point higher than the average rate of 3.96% measured over the past nine years.

    The organization's annual IT survey includes these highlights:

    Most IT leaders expect budget increases. Looking ahead to 2014, 65% of survey respondents say IT budgets will increase, 23% expect to see a decline, and 12% are forecasting no change. The average increase is projected to be 1.48%.

    Headcount increases outnumber reductions. Nearly half of companies (47%) reported an increase in internal IT employees in 2013, while 23% said staff numbers declined. The average increase was 1.10% in 2013. Next year, 55% of respondents anticipate growing headcount; 18% expect reductions.

    Raises are the norm. A decisive 89% of respondents said average IT salaries climbed in 2013, while only 4% reported decreases. The average pay increase was 2.24% in 2013. Next year, 90% expect to boost salaries by an average of 2.45%; 4% expect reductions in pay.

    Staff turnover is accelerating. After stalling for a few years, staff turnover increased among IT pros this year. The rate of turnover hit 6.58%, up from 5.23% in 2012, 5.51% in 2011, and 5.5% in 2010.

    Training budgets are rebounding. In 2013, companies allocated 4.68% of their IT budgets for education and training -- a sizable increase from 2012, when 2.87% of budgets went to training.

    Most IT monies are spent internally, domestically. IT leaders allocated 73.2% of their 2013 budgets to in-house, domestic spending. Another 22.9% was outsourced (17.2% outsourced to domestic providers, 5.7% outsourced offshore). The remaining 3.9% was allocated to in-house offshore spending.

    Analytics rule... Survey respondents were asked to rank their largest or most significant IT investments in 2013, and analytics/business intelligence was the clear standout, cited by 42% of respondents. Other popular priorities include: CRM (19.5%), cloud computing (18.6%), and ERP (16.6%).

    ....yet analytics are worrisome. IT pros were also asked about their greatest concerns, and analytics/business intelligence topped the list of worries. Security ranked second among IT concerns, followed by disaster recovery, cloud computing, and BYOD.

    Business alignment remains an imperative. When asked about the most important IT management concerns for the organization, the most pressing issue cited is a familiar one: alignment of IT with the business. IT pros also said the organization is concerned about business agility, business productivity, business cost reduction/controls, and IT cost reduction/controls.

    Similarly, when IT pros were asked about their own IT management concerns, IT/business alignment also ranked first. But priorities shifted after that. The next most worrisome issues for IT pros are security, followed by talent shortages and business continuity/disaster recovery.

    Economic uncertainty is still taking a toll. While the majority of respondents reported positive gains in IT spending and personnel, not everyone did. To recap, 27% of respondents cut IT budgets this year, 23% trimmed IT headcount, and 4% saw reductions in average salaries.
    [Full Article]   Nov-17-2013


    Investing in Digital Technologies and Improving Customer Experiences is Enabling Companies to Identify New Growth Opportunities and Enhance Performanc

    While many organizations are focused on IT cost reduction, productivity gain and process improvement, the latest global research from Accenture reveals that companies that invest in digital technologies and improving customer experiences are able to identify new growth opportunities and enhance performance.

    The research report, High Performers in IT: Defined by Digital, features insights from senior IT executives in more than 200 global companies across a range of industries. The report shows that high performers devote 55 percent of their information technology (IT) budgets to delivering strategic capabilities that support growth and business performance. Their counterparts, however, invest only 37 percent. Moreover, five times more businesses (50 percent) that excel in their use of IT, look beyond a narrow IT lens to consider broader business implications - social, economic and geopolitical factors - as part of their strategy and planning.

    Accenture's research found that the adoption rate of key technologies, including cloud computing, analytics, social, mobility and security, was greater across-the-board for companies that excel in their use of IT than their counterparts. According to the research, these companies have recognized and embraced the transformational impact of digital IT to create new products and services that supports growth.

    For example, the high performers are leading the way in “mobilizing” their businesses. According to the research, 69 percent of them are committed to mobile transactions compared to 42 percent of other organizations, which allows their customers to reorder their favorite pair of shoes, book travel, pay for their coffee and even transfer cash between bank accounts on the go. And approximately twice as many IT leaders than non-leaders are achieving or exceeding expected business value from their investments in predictive and descriptive analytics.

    Mastering a Hybrid IT Environment

    According to the findings, the leaders in IT are also moving to the cloud faster and reaping more benefits sooner than other organizations. One-third (33 percent) of the executives representing those companies responded that they are effectively replacing legacy components with private and public cloud alternatives while almost one in six (15 percent) already centrally manage a fully virtualized, dynamically provisioned hybrid infrastructure.

    The survey also found that companies expect to operate in a hybrid IT environment for the foreseeable future. The top performers predict that a substantial part of their IT footprint – whether infrastructure, middleware or applications – will remain “traditional,” both hosted and on-premise. In fact, these leaders believe that they will still maintain nearly six in 10 of their applications (59 percent) in a traditional license model by 2020.

    It's clear that high performers are more effective in taking advantage of cloud technology considering that:

  • 40 percent see measurable improvements in IT agility, with only 9 percent of other organizations claiming the same.

  • 43 percent declared strong results in aligning between project portfolios and IT business goals, a 23 percent advantage over other organizations.

  • 33 percent see direct cost reductions as a result of their cloud investments while only 14 percent of other organizations see similar results.

  • Having the Right Data Creates Competitive Advantage

    Leaders in the use of IT have been investing in master data management and data quality assurance for years, and as a result, they hold a significant advantage in the race to getting the right data. Their investments are now paying off. According to the research, twice as many high performers as other organizations are achieving or exceeding the business value they expected in key areas such as data management (77 percent vs. 30 percent), content management (77 percent vs. 23 percent) and predictive analytics (54 percent vs. 21 percent).

    By successfully navigating the dynamics between information and business processes and systems, those performing at the very top are much better equipped to build strategic analytic capabilities than their counterparts. Almost half (46 percent) say they already have developed and capitalized on new insights on changing customer behavior, compared to just three percent of other organizations.

    It Really is All About the Customer

    Leaders in IT consistently chose customer-focused business objectives among the top three priorities that guide their IT investment strategies. This includes providing the right information to the right person at the right time, finding better ways to interact with customers and delivering new services and products to customers. They also rated front-office applications among their best-performing in terms of technical and business adequacy, which was significantly higher for their companies than for other organizations.

    Managing IT Security and Business Risk

    Organizations are increasingly focused on ensuring the security of their growing digital business but many struggle to keep pace with new security technologies. Although most survey respondents believe they currently have the right level of investment in compliance and overall security, 44 percent concede that they have been underinvesting in cyber-security. There is a general acknowledgement that endpoint security is not sufficient. But the shift to active defense strategies – staying one step ahead of the attackers – has not yet taken hold. Still, 75 percent of high- performing organizations have made it a priority to further lower their risk profile and more rapidly upgrade their IT security practices within the next year.
    [Full Article]   Nov-10-2013


    Study Reveals More than 2/3 of Marketing & IT Leaders Report Being “More Effective” Due to Collaboration

    To meet the needs of today's evolving digital, mobile and social world, marketing and technology executives are finding collaboration across people, processes and technologies is leading to more effective business outcomes. To demonstrate how organizations are embracing collaboration, Oracle, in partnership with Leader Networks and Social Media Today, launched an executive study revealing opportunities and obstacles for senior marketing and technology leaders to more effectively collaborate and to deliver real-world business value. The results of the survey highlight how marketing and technology teams are working together, when they are working in silos, and the business value of becoming a socially enabled enterprise.

    Key Findings

  • Marketing and technology roles are changing: Both marketers and IT leaders report seeing their roles evolve due to a greater emphasis on social business activities. Both groups indicate they now have the ability to collaborate more effectively. They also recognize the need to acquire new skills and hire new skillsets to meet the needs of today’s evolving digital, mobile and social landscape.

  • Marketers lead the collaboration charge: Marketing respondents were more likely to report a higher level of collaboration than their IT/technology counterparts.

  • Current collaboration leaves room for growth: Only 36 percent of marketing respondents and 26 percent of IT/technology respondents report collaborating with each other “frequently” on projects. Slightly more than half of marketing and IT/technology respondents classify their collaboration as “adequate.” Sixteen percent of IT/technology respondents reported that collaboration with marketing is “non-existent.”

  • Despite challenges, collaboration is better than before: Very few respondents reported collaborating less than they did a year ago. Moreover, 41 percent of marketing and 38 percent of IT/technology leaders indicate improved collaboration from last year.

  • Collaboration delivers business value: More than two thirds of both marketing and technology leaders stated that they are “more effective” professionally due to increased collaboration. Reported benefits included stronger and more compelling marketing messages, faster speed-to-market, greater product adoption, project cost reductions, and fewer defects in product and services.

  • [Full Article]   Nov-10-2013


    Survey: Big Changes Coming For Future Contact Centers

    Dimension Data, the $5.8 billion global information and communications technology (ICT) services and solutions provider, announced the results of its 2013/2014 Global Contact Center Benchmarking Report, which uncovers significant challenges and emerging trends indicating that the contact center of the future requires a new caliber of technology and resources to keep clients engaged and employees happy.

    To extract this information, Dimension Data surveyed 817 participants covering 11 business sectors in 79 countries across the Americas, Europe, Asia Pacific, Australia, and the Middle East & Africa. Participants of the survey revealed the following:

  • Customers are increasingly dissatisfied with their contact center experiences, especially Generation X and Y, who demand a choice of multiple interaction points beyond phone calls, including web chat, smartphone applications and social media.

  • As contact centers continue to transition their communications platforms, front-line customer service staff are leaving their positions at a growing rate.

  • Web chat communications systems may be the remedy for increasing end-user dissatisfaction, as customers increasingly expect seamless interaction transitions from one channel to the next.

  • Contact center workers, end users remain dissatisfied

    Contact centers are on an evolutionary path to become highly responsive, cross-channel multimedia hubs. This transformation is creating increased complexity for contact center agents because they are not always hired or trained to communicate within these new channels. As a result, contact center agent absenteeism is three times higher than contact center management; agent attrition is up an alarming 26 percent over 2012 rates. The 2013/2014 Contact Center Benchmarking Report notes that organizations must revamp their operating models, starting with properly trained agents – or risk losing them.

    Customer satisfaction is also down for the fourth year running. Contact resolution rates have dropped for a fourth consecutive year, leaving customers with a three-in-four chance of having their issue resolved when contacting a service provider.

    Preparing for multichannel engagement starts with hanging up the telephone

    The global report shows that for Generation Y – individuals born between 1980 and 2000 – the phone is now the third choice of engagement after electronic messaging and smartphone applications. In addition, the preference gaps for Generation X (individuals born between 1961 and 1989) between phone, messaging, and social media is also narrowing.

    Almost one third (31.8%) of contact center advisers are now handling transactions across a variety of emerging channels, such as smartphone applications. Social media and/or web chat deployments are also on the rise: 50.6 percent of contact centers currently offer, or have plans to implement, a web chat solution. The number of planned deployments increased 27.2 percent over the past 12 months, with a further 13.7 percent of survey participants expecting to have a solution in place over the next two years.

    The report shows that organizations are aiming to shift 32.6 percent of contacts typically handled by agents to self-service channels. However, organizations under pressure to meet multichannel demands have rushed the haphazard implementation of solutions that only address one channel. As a result, self-help options in the contact center are not catching on as expected, and isolated technology systems are hindering the multichannel consumer experience. Omnichannel is the way forward, and customers want to hop seamlessly across channels and experience true connectedness. Omnichannel interactions that start on one channel and then continue on another, such as web chat, are no longer a “nice to have” feature, but a necessity.
    [Full Article]   Nov-10-2013


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