Analyst house Gartner is warning that the economic downturn, coupled with rising cost-cutting initiatives, means that businesses will increasingly depend on advanced network capabilities to drive business improvements and grow revenue streams.
The research firm released the findings of a survey conducted between September and December 2008, which delivered some expected results. Of some 1,527 CIOs polled, a majority in North America and Europe reported flat IT budgets for the coming year, while slight increases in spending are expected in Latin America and decreases are expected in the Asia/Pacific region. Yet despite lack of funding, CIOs are determined to make improvements in several key technology areas.
For instance, CIOs indicated business process improvements and business intelligence technology as their top business and technology priorities for 2009, respectively. Gartner analysts attribute CIOs' keen focus on business to a need to work smarter going forward.
"Fifty-seven percent of CIOs responding said that business process improvements was among their top five priorities, and the reason why is that companies are looking to reduce their cost structure by changing the way they work," says Mark McDonald, group vice president and head of research in Gartner Executive Programs. "Doing that obviously requires not only changing business processes, but also changing the applications and technologies around business intelligence."
Rounding out the top five business priorities were reducing enterprise costs, improving enterprise workforce effectiveness, attracting and retaining new customers, and increasing the use of information and analytics. As for top technology priorities cited by CIOs, after business intelligence comes ERP and CRM applications, then enterprise applications, server and storage technologies (virtualisation), legacy application modernisation and collaboration technologies. Networking, voice and data communications ranked sixth among the priorities, while technical infrastructure came in at seven and security technologies followed.
McDonald noted the growing importance of IT as a key business enabler across nearly 60 percent of respondents.
"Business process change and improvement is now a core expectation associated with IT. It has been a top priority since 2003, but now it is accepted broadly that IT [must] work at these business goals across a majority of CIOs," he says.
A large part of that expectation of IT as a business enabler, McDonald explains, traces back to a dependence on the network and associated technologies to help companies continue to deliver more services, even when costs are being cut. As part of the survey, Gartner asked CIOs what kind of value for the money they get out of specific vendors and technologies. Regarding the network, CIOs rated its value as 7 out of a possible 10, with 10 being the highest value.
"The top five business priorities among CIOs in 2009 all require a unique combination of more connectivity, more bandwidth and more information exchange, which means the network component of this is as critical, or more critical, of an enabler than other technologies," he says.
Hardware was the only other technology category that ranked higher in terms of value, but McDonald explained that doesn't mean there will be big investments in hardware in 2009.
"It is going to be a tough year for hardware because there is already a lot of capacity out there," McDonald says. "But CIOs are reporting that transaction volumes are growing at a tough clip, meaning companies are working harder for each dollar of revenue. But to tackle transaction growth, network and storage capacity demand will continue. Companies will have to do more transactions to grow revenue and the network will enable that."
Gartner says the CIOs surveyed represent about $138 billion in corporate and public sector IT spending.