IT Budgets up 17% in Australia Next Year, Gartner Survey Finds
SYDNEY, NOV 10, 2003 — A dramatic rise in IT spending in Australia next year will end the local industry malaise as the nation's biggest buyers focus on improving back-end systems and adopting new technologies for productivity gain.
A Gartner survey of 263 CIOs in Australia has found average spending for technology and services by medium and large companies will leap 17 per cent for 2004. Budgets for this year increased only 5 points from 2002.
A hallmark of the spending increase will be the emphasis on improving core infrastructure as companies shift platforms, embrace web services and refresh assets purchased in the boom years from 1997-99.
Gartner Senior Vice-President and Chief of Research, Bob Hayward, will announce the survey findings during the keynote address at the company's Symposium & ITxpo, which begins in Sydney tomorrow.
"Most of the investment will be spent at the heart of the organisation, bolstering security and creating a stronger and more efficient IT structure that provides true value to the business," says Hayward.
"A return to strong spending patterns does not signal a return to the dotcom days. CIOs will not fritter away their larger budgets on the latest-and-greatest this time."
Some of the technologies that will been given budget allocation for the first time will include radio-frequency identification (RFID) chips to track goods, wireless LANs (local area networks) and IP (Internet Protocol) telephony.
"These are not new technologies," Hayward continues, "but they have become more mature and their beneficial impact on productivity is now easier to understand and quantify.
"No substantial or moderate spending on an IT project will occur next year without a business case being approved. IT vendors seeking new opportunities will gain substantially by helping their clients through this process and articulating the business value of their technology or service."
The survey of Australia's large and medium-size companies (those with more than 100 employees) predicts a mean average IT spend of $9.1 million in 2004. When those figures exclude those with extraordinary spending power, such as Telstra, the so-called trimmed mean is $6.02 million.
The positive mood is not unanimous, however. The boost in IT spending will come from only 37 per cent of companies, according to the survey. Some 45 percent say they will maintain current budgets while one in six indicated cuts would be enforced.
"Spending will be driven where technology can create competitive advantage and be a key differentiator," continues Hayward. "We will see strong spending in service organisations, particularly in the financial sector."
Hayward says perceived improvement in the global economy, and the continuing robustness of the outlook for Australia, have contributed significantly to the upbeat strategies of many CIOs.
"The economic cycles are better, the fear of war is no longer with us and there is a real need to refresh much of the technology that was purchased in the past three to six years," he continues.
"The dampened demand for IT in the past couple of years has give IT departments the opportunity to pause for breath. The most mature of these organisations have spent their time implementing strong IT governance principles and have instilled strong leadership and mentoring.
"CIOs and their management teams understand better today the risks involved in technology implementations. As a result, we will see better portfolio and project management."
The combination of IT maturity in Australian and a bullish spending outlook is not a coincidence, says Hayward.
Neighbouring Asian countries, hurt significantly by the SARS outbreak this year, are more cautious but ultimately changing their attitudes, too. Results of a 211-CIO survey in Singapore show a strong turnaround in IT budgets, coming back from a 4-point contraction this year to grow 6 percent in 2004.
South Korea, one of the region's strongest economies currently, appears less enthusiastic. A survey of 279 CIOs there finds spending will rise three points to 9 percent next year.
Mr Hayward will provide a thorough analysis of these figures, describing what they mean for buyers and sellers of technology, during the keynote at Gartner's 11th Symposium/ITxpo at the Sydney Convention & Exhibition Centre, Darling Harbour, Sydney, starting tomorrow.
Interview opportunities with Mr Hayward are available today.
To organise an interview, please contact Jo Lobban on 61 2 9459 4692 or email joanna.lobban@gartner.com
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