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Saturday, March 10, 2007

Global Business Growth & Innovation To Fuel Tech Spending

Growth and innovation are the top ticket items on the CxO minds confirms a survey finding of international CxO’s by Saugatuck Technology and BusinessWeek Research Services.

Key Finding : Revenue growth outpaced both cost control and asset allocation by a 5-to-1margin as the top business strategy for C-Team executives to improve their firm’s financial performance for 2007 – implying a more than subtle shift in priorities – and what looks like an emerging scenario of accelerated business spending rather than saving. In support of this shift, the top five business goals of C-Team executives are all revenue, customer and market share growth related – with managing budgets and ROI measurement metrics falling precipitously in the rankings.

Does it mean back to the old days of hectic enterprise wide spending ? The answer is NO. IT spending priorities are continuing to focus on point projects rather than enterprise-wide initiatives, as well as investments that improve the integration and availability of data and/or applications, enabling enterprises to better leverage existing IT and to improve business and IT operations and efficiencies. What does this mean to the tech ecosystem? The shift away from cost control to corporate spending and investment focused on top-line revenue growth and innovation has, and will continue to have, significant impact on both IT buyers and vendors. While IT buyers will see their budgets increasing over time, spending will continue to be restrained and tactically strategic in nature (with an emphasis on innovation at the margin). It is clear that the C-suite is not completely aligned with respect to how to best achieve top-line growth. That presents huge opportunities to the tech players and CIO's, who can try out unique innovative inititatives. Big ticekte investments are likely to be in the arenas of Business Intelligence, Data Warehousing, and Portals and Collaboration, besides a growing commitment to SOA (and investment by IT organizations) as a means of creating greater organizational agility – and as a platform for product and service innovation – while at the same time leveraging prior IT investments. SaaS and Open Source are two disruptive innovations with significant momentum that will also impact how vendors relate to IT spending and investment.

Saugatuck while anticipating growth in IT capital budgets throughout the remainder of this decade which should help further fuel spending on key infrastructure and integration initiatives has this dope of advice to the players: user executives will need to find creative ways of enabling business growth while spending struggles to close the gap – and that IT vendors will need to deliver more business innovation as part of their software and service solutions. A recent Mckinsey survey pointed to the advent of two trends in information technology that will become increasingly important to CIOs in 2007:
- A migration to service-oriented architectures and
- The introduction of lean-manufacturing principles to data center operations.
An Alinean study of IT spending finds that Across the 37 industries in the study group, innovation investments were up sharply in several segments. The dynamism, more than anything else proves that IT Does Matter!!. Next time as an user when you spend on IT initiatives ask yourself whether this is in alignment with global trends or as a vendor/service provider, are your efforts and investments going towards exploiting this growth trajectory.

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