IT spending priorities for 2013

As economic uncertainty persists, companies will remain focused on conserving cash and controlling cost, writes Kevin Walsh, head of Deloitte’s Technology Consulting practice

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IT spending priorities for 2013

The number one issue affecting technology spending is still the economy. However, while the economy remains a key concern, immediate threats such as a Eurozone break-up and triple-dip recession are receding, according to Deloitte’s latest CFO Survey, which gauges the views of CFOs and finance directors from 112 major companies. Despite expectations of a weak recovery in 2013, large companies have entered the new year in more upbeat mood than 2012 and will grab opportunities for growth – but they won’t be taking unnecessary risks. Businesses will have a steady-as-we-go approach, with a greater focus on cost control and cash flow than at any time in the past two years. The emerging picture is of businesses that are constrained by low growth and uncertainty rather than weakness in their business models or access to capital. So what could this mean for technology programmes and spending in the year ahead? Notwithstanding the economic backdrop, in 2013 the tech sector will continue to make large investments in new technologies and services as the competition to capture largely flat corporate IT spend intensifies. We’ll see more acquisition of niche and emerging organisations as leading tech providers look to differentiate and complete their offerings and interesting companies that cannot withstand the market uncertainty become better buys. The new products and delivery models from suppliers will offer corporates an ideal time to invest in new technologies. The cost of capital is low and the opportunity is to take a significant step forward in capability delivery to the business, while significantly reducing the running costs of complex and outdated IT estates. However, the programmes required to implement change remain complex and costly, and the risk inherent in such programmes will remain a major factor in deciding which will be launched. Programmes that we believe companies will consider launching in 2013 will be driven by the following: Need (regulatory programmes): Implementing scalable, less capital intensive technology solutions (SaaS/cloud and new outsourcing models), or preparing them further for their digital futures. Regulatory programmes: These are not new, but we expect to see increased appreciation and recognition for IT as management and regulators realise the important role of IT systems in regulation and compliance. Applications: Cloud/SaaS will continue to grow as organisations move to standardise processes and seek rapid implementation to support new capabilities. Beyond cloud, many organisations will look to move from costly customised systems to new packages specific to their industry. Revised outsource, service contracts and new IT organisations: The monolithic contract does not fit today’s business requirements. Organisations will continue to test for value for money, flexibility and innovation – and often choose superior ecosystem approaches and improved in-house capability to support future technology requirements. Digital and online: Having again seen significant growth in online spending this Christmas, retailers and organisations with significant customer interaction need to move quickly to ensure that they will offer their customers the seamless, content-rich and interactive experience they demand. Value from data: Organisations are exponentially increasing the amount and quality of the data they produce, harvest and store. Couple this with the new multi-channel, digital demands of customers, and businesses will need to invest in new strategies for storing, structuring and exploiting their data, to fully prepare for the future integrated digital world. We can expect 2013 to be a tough operating environment. Organisations will continue to develop clear business priorities, and technology programme selection will be driven by efficiency, tightly controlled spending and rapid payback objectives. A theme of preparation will emerge throughout 2013, as companies’ technology spend horizon will lift slightly, focusing on the opportunities to come, as well as the clear and immediate cost reduction imperative.