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CIOs: Give priority to technologies to keep up with – or surpass – your competitors, reports Forrester

CIOs: Give priority to technologies to keep up with – or surpass – your competitors, reports Forrester

In steady, moderate growth technology markets, where should CIOs invest – or cut back?

Forrester says its global forecast for steady, moderate growth tech markets in 2015 and better growth in 2016 will allow most CIOs to increase their tech spending in the next two years.

As CIOs prepare and manage their 2015 tech budgets, they can confidently push for increases of 4 per cent to 6 per cent in their purchases of tech goods and services, depending on their country, writes Forrester VP and principal analyst Andrew Bartels in The Global Tech Market Outlook For 2015 To 2016 report.

With improving economies in the US and elsewhere offsetting weakness in Europe, Japan, and oil-exporting countries, the global tech market will see growth of 5.3 percent in 2015 and 5.9 per cent in 2016, according to Forrester's annual forecast.

Software purchases will have the largest share this year, at US$620 billion.

Applications — mainly process apps, but also covering desktop, information management and analytical apps, and vertical industry apps — comprise the largest share, followed by middleware and custom apps built by contractors and consultants, according to the report released last week.

To stay ahead of and make sense from this flood of awareness data, CIOs need to be building up their analytics and big data capabilities.

Read more: CIOs need to proactively supply the business with ‘platforms of innovation’

Tech consulting and systems integration services will be the second-largest category at $514 billion. This is followed by tech outsourcing (including computer hardware support services and now infrastructure-as-a-service) at $456 billion and computer equipment at $393 billion.

Communications equipment ($353 billion) will be the smallest sector of tech spending, though these figures exclude spending on corporate telecommunications services.

The report states the Asia Pacific tech market – which includes New Zealand - will grow by 4.8 per cent in 2015 and 5.4 per cent in 2016, keeping up the 4.5 percent pace in 2014 in local currency terms.

But tech spending differs across parts of the region. China, together with the ASEAN countries of Indonesia, Malaysia, and Singapore — are growing quite strongly (though not as rapidly as in the past) — while other parts – like Japan — will show little growth.

Read more: Expect tech spending outside the CIO’s department to rise in 2015: Forrester

In between are countries like Australia, Hong Kong, New Zealand, South Korea, and Taiwan, whose growth is closer to the regional average, the report states.

Tech spending growth plans, meanwhile, will be dependent on country and industry. For instance, with the big drop in oil prices, CIOs in oil and gas companies or in oil-exporting countries should plan for flat or reduced spending.

Read more: Switched on CIO: Simon Clarke of Trustpower

On the other hand, CIOs in oil-consuming countries or in industries like airlines, transportation and chemicals will have an opportunity to increase their tech budgets as their input costs drop and profits improve.

Within these constraints, CIOs should prioritise investments in areas to keep up with or surpass their competitors, says Forrester.

The first area is investments that support the BT or business technology agenda. Forrester says BT technologies focus on sales, marketing, service, product management, and fulfilment activities. They also include products like talent and recruitment management software or services procurement to acquire the resources to meet customer demands, as well as mobile apps and mobile devices.

The other area is cloud computing, especially for software as a service. Forrester notes many new application categories are only available or mostly offered on a SaaS basis, while SaaS apps are also becoming credible replacements for on-premises software in areas like customer relationship management, human resource management, commerce servers, and e-procurement.

Read more: How to turn decision making into a competitive advantage: PwC

“Choose your cloud apps carefully, balancing the benefits from these apps against the risks they still pose as the SaaS market further unfolds,” Forrester advises.

CIOs should also look at analytics, big data and smart process apps as priority investments. Forrester notes how businesses are seeing a rapid growth in data from sensors and other awareness technologies like RFID, social media monitoring, and GPS signals.

"To stay ahead of and make sense from this flood of awareness data, CIOs need to be building up their analytics and big data capabilities," Forrester advises.

Meanwhile, weak demand for IT goods and services is providing CIOs opportunities to push for big discounts in hardware, mature apps and outsourcing. “Slow growth in these areas means vendors will go to great lengths to close sales, so use this to your advantage,” it states.

Read more: New Plymouth District Council deploys enterprise content management system from TechnologyOne

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