IT Budget Agenda 2008

Spending for IT goods and services is expected to grow next year, as organizations enter a new phase of technology acquisition.

In 2008, IT will experience an 8 percent increase in spending over 2007 purchasing budgets—that’s 3 percent more than in 2007, said Andrew Bartels, an analyst at Forrester Research, in Cambridge, Mass.

Data center consolidation, infrastructure refresh and security enhancements have typified much of IT spending since 2000. For 2008, spending patterns are expected to begin to change, as companies focus more on increasing productivity than in cutting costs.

“Forrester talks about two periods of technology acquisition, which we call ‘tech digestion’ and ‘innovation growth,'” Bartels said.

During tech digestion, acquisition is all about price and ease of use, with budgets primarily driven by return on investment calculations. There’s a large focus on infrastructure rationalization and process automation—pretty much what’s characterized technology acquisition for the past seven years or so.

Next year will signal a point of transition, as we’ll see a whole new level of investment for the next four or five years. Purchases will be driven more by functionality and less by ROI calculations. “There will be a shift from making processes more efficient to helping companies optimize business results by adding analytics and vertical industry knowledge,” said Bartels.

According to Forrester research, software spending will show the greatest increase over 2007, rising by 10 percent, fueled by the drive for greater productivity as well as the spread of virtualization software in the data center. Communications equipment purchasing will show the greatest percentage increase (9 percent more than the 2007 budget), heavily influenced by carrier infrastructure investment.

Communications equipment purchasing by enterprises will be more modest, growing at 6 percent more than 2007 budgets. The budgets for computer equipment will show a slightly lower growth, at 4 percent, than it did in 2007, while budgets for IT services and outsourcing will jump by 8 percent.

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