MERGERS, ACQUISITIONS AND FINANCIAL RESULTS

SA IT TO OUTPACE GLOBAL GROWTH

South African IT budgets are expected to grow faster than their international counterparts this year, a Gartner conference has heard.

Globally, IT budgets are expected to grow at 2.7% this year. Local companies, however, will experience growth at a faster rate than this, as Gartner has pegged SA's IT budget growth at 7.2%.

This compares favourably with worldwide economic growth of 4.9%, Gartner research VP Mark Raskino told delegates at the 2006 Gartner Symposium in Cape Town yesterday.

Compared with a spread of industries, SA's expected IT spend still outflanks global industry-specific growth. Even the sector categorised as high technology, expected to grow at 6.7% this year, will grow its IT budget by only 2.5%.

Raskino said IT executives and managers are increasingly being expected to do more with less. This is especially true in countries with inflation rates over budget growth.

There are challenges facing the industry globally. CEOs are questioning whether the economic boom can continue. In addition, increased competition has led to consolidation, placing fears of takeovers uppermost in CEOs' minds.

While CEOs know technology can make their lives better, this is not something they are observing first-hand in their organisations. Instead, they are faced with a plethora of data that does not make critical decision-making any simpler, said Raskino.

As a result, CIOs rate delivering projects that enable business growth at the top of their agendas, according to Gartner research. Among the top 10 imperatives this year are several business-oriented strategies as CIOs move to avoid commoditisation.

Gartner research VP Mark Raskino said IT executives are increasingly being expected to do more with less.

Raskino said this scenario alters the role that IT is expected to play in a changing world. IT has a window of opportunity in which to grow its contribution to the company's growth strategy.

This will necessitate CIOs delivering a record of performance to establish their position and contribution in the organisation. "To do this, CIOs will need to create business value faster than the market and technology can reduce IT and business costs," stated Raskino.

In addition, CIOs are not going to be able to cut costs to add value. They will have to deliver measurable value to the company.

Compuware country manager Gerrit Bus concurs. "[There is a] gap between what the business wants and what IT delivers," he said.

Bus, addressing a round-table at the symposium, said about 80% of an IT budget is spent on "keeping the lights on", with the remaining 20% being spent on innovation.

Moreover, he argued, return on investment from IT spend is lower than in other industries. "[Companies] spend a lot of money, but don't ask what the return is."

Source: ITWeb

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