IT Investment Trends: The Infrastructure BacklashBy Guy Currier | Posted 06-30-2011
IT Investment Trends: Infrastructure Back in the Mix
CIO Insight's latest IT Investment Trends study shows renewed interest in the fundamentals of the IT infrastructure. This is refreshing amid today's ethereal talk about clouds and virtual machines. It's also a reflection of the uncertain economic state from which businesses are slowly emerging and the muted growth they're experiencing.
In some cases, attention to "the fundamentals" means a turn back toward computing hardware that's badly in need of a refresh. In others, it means investing in half-neglected infrastructure that is needed more than ever as a consequence of those ethereal technologies. (To download a pdf version of the full IT Investment Trends study, including charts, click here. For our Expert Voices perspective on Investing in IT, click here.)
Midrange enterprises (with 50 to 499 employees) had to be most cautious during the downturn, but they now have a strong focus on the basic areas. (See chart at right.) In these enterprises, categories where the most organizations are increasing spending year-over-year are user PCs (74 percent) and servers (72 percent).
In large enterprises, investment in systems did not suffer as much as it did in midrange organizations in recent years. Instead, budgets were increased for other elemental IT areas, especially back-up and continuity. Roughly a third of large enterprises say they're increasing budgets in each of these categories.
In 2010, most IT organizations spent more than originally budgeted on central technology needs, such as security and email systems. (See Finding 1.1 on page 17) That's because last year's budgeting cycle -- which took place in late 2009--occurred before the economic recovery started.
In late 2009, companies were tightening many kinds of investments. So, by second-half 2010, some areas of infrastructure had become creaky, and upgrading became the lower-cost option. As a result, organizations had to return to pre-recession technologies they'd half forgotten.
IT Investment Trends: The Infrastructure Backlash
The enthusiasm the recession brought to cloud and virtualization technologies added to the infrastructure backlash, as organizations found that some pre-cloud, pre-virtualization technologies needed shoring up in order to function in today's environment. This explains the overspending we see in the data center, encryption authentication, and systems management and support.
Large enterprises most frequently spent more than budgeted on business intelligence and data mining applications (54 percent), mobile devices (45 percent) and wireless equipment (42 percent). In comparison, only 29 percent of midrange respondents spent more than budgeted on mobile devices. (See Figure 1.2 on page 17.)
Storage hardware remains on a steady upswing. (See Finding 2 on page 18.) That's being driven by intense continuity and upgrade needs that arise from newly virtualized (and cloudy) environments.
Amid this discussion about infrastructure's consequences, we should give pride of place to the newest technologies.
- Budgets for private clouds are expected to grow 23.5 percent in 2011, compared with 7.5 percent growth in 2010.
- Budgets for cloud services are expected to increase 19.8 percent in 2011, versus 6.4 percent in 2010.
- Budgets for IT automation are projected to increase 15.2 percent in 2011, versus 3.3 percent in 2010.
Virtualization, while strong, did not see a significant uptick in spending from 2010 to 2011. This indicates that the virtualization market has reached a maturity level.
Cloud computing has contributed to much higher desktop and notebook budgets in 2011: On average, enterprises are expecting to spend 21.3 percent more than the previous year. The cloud has also led to sharp increases in 2011 spending plans for desktop management (18.1 percent), applications management (12.2 percent) and governance (11.6 percent) compared with 2010. (See Finding 2 on page 19.)
IT Investment Trends: How We Conducted the Research
CIO Insight's 2011 IT Investment Trends Study was fielded May 17-June 14, 2011, and was designed by CIO Insight in conjunction with the research division of Ziff Davis Enterprise. A random selection from the company's lists of readers and site visitors was emailed inivtations to participate. The study itself was conducted online. In all, 470 respondents familiar with their organizations' budgetary and spending levels completed the survey.
About the Author
Guy Currier is senior editor/research for CIO Insight.