2008 Spend on IT for IT to Jump 9.3 Percent

By Doug Bartholomew Print this article Print

A recent study shows a projected bump from 2007 in IT spend in specific automated and transformative IT management software, including areas to improve compliance and security measures.

With the U.S. either in, or almost in, a recession, it’s no surprise that most companies are expected to spend this year only about 5 percent more than they did last year on information technology, according to various analysts’ estimates. But what about IT organizations—how much are they planning to invest on IT management software this year?

Surprisingly, although IT groups are not exactly ready to spend like bands of drunken sailors, they plan to boost spending on software to manage IT functions by an average of 9.3 percent more than in 2007, according to a January report by AMR Research. “We are going to start seeing more investment in automation to transform IT processes,” predicts Dennis Gaughan, research director at AMR Research in Boston.

The survey, which focused not on the overall IT budget, but specifically on software, hardware and services for IT governance, management, operations, and development, polled 405 respondents in IT management worldwide. Taken as a whole, those responding said they typically spend one-third of their IT budget on IT for IT.

“These are the tools and the technologies IT needs to spend on to run the organization,” Gaughan explains. “These are IT management’s plans for spending.”

Topping the list of priorities for IT buyers is improving security and compliance, with 49 percent of organizations in the U.S. listing IT security as “one of their top two IT business process priorities” for 2008.

“IT organizations need to think about risk more strategically than in the past,” Gaughan observes. “Much of the emphasis on security spending is being driven by the increase in regulations, requiring companies to do more to protect customer information and guard against the kinds of highly publicized data breaches that have occurred.”

What’s more, the heightened sense of concern over security of customer files and other sensitive data has caused greater organization-wide scrutiny over the IT organization’s information security programs. “This has become a boardroom topic,” Gaughan adds. “CIOs now see it as something affecting the entire IT organization, not just the security staff.”

The other area poised for growth is systems to help automate companies’ adherence to the widely adopted ITIL standards for improving IT internal processes. Companies typically use the Information Technology Infrastructure Library (ITIL) to define the scale and scope of standardized work processes for systems operations. ITIL establishes a common basis for the way IT projects are undertaken and managed. 

Many large IT organizations, such as General Motors and General Electric, either have already embraced ITIL, or are working to make parts of the framework of standards their own as a means to help improve IT processes. “Based on conversations with out customers, I’d say about half are adopting ITIL or are in the planning stages,” Gaughan says. “And now we are starting to see ITIL in more midsize corporations as well.”

“ITIL has been around for a number of years, but lately we have seen a broad culture and change in the way IT is managed as more IT organizations are moving to ITIL to help them redefine their processes,” Gaughan points out. “We are going to start seeing more investment in automation that helps enable the transformation of IT processes.”

The survey results bear this out, as IT operations management was the second most frequently cited priority for IT groups’ investment in 2008, with 35 percent of U.S. IT organizations citing it as one of the top two business priorities. Gaughan says the prime driver behind this emphasis on improving IT operations is cost controls. Exactly 50 percent of respondents worldwide cited infrastructure management as one of the top three most labor intensive IT activities—more than any other IT activity citied.  

AMR is so bullish on IT management software, in fact, that the research firm has coined a term, “IT Resource Planning,” to cover what is fast becoming a suite of IT management software applications. Leading vendors in this emerging market, Gaughan says, include BMC, Computer Associates, Hewlett Packard, and IBM.

A typical software package that Gaughan says IT groups are likely to invest in this year is the configuration management database (CMDB). “This is a system to capture information about the various IT assets, including software, servers, and network devices,” Gaughan says. “The idea is that a network manager can use the CMDB to look at, say, a router that is down and see exactly how it impacts the rest of the IT operations. It’s a system of record for the entire IT infrastructure.” Other areas likely to see increased IT spending are systems to manage service-oriented architecture, vendors, and IT investment itself. “One of CIOs’ primary areas of concern is how to get better visibility of their spending,” Gaughan says. “They want a better understanding of where their money is going.”

This article was originally published on 2008-02-08
Doug Bartholomew is a career journalist who has covered information technology for more than 15 years. A former senior editor at IndustryWeek and InformationWeek, his freelance features have appeared in New York magazine and the Los Angeles Times Magazine. He has a B.S. in Journalism from Northwestern University.
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