Cutting IT spend is in vogue in Asia Pacific - even for those companies getting an increased IT budget!

I recently completed a report comparing the movements and trends in IT budgets across different countries across the Asia Pacific region. The general finding of the report was that although IT budgets are down on average, there is a chasm appearing between the "haves and have nots" for IT spend. In summary, while the average decrease in IT budget decrease is around 5%, of those companies getting an increased IT budget, their spend increased by between 15-20% on average, and for those receiving an IT budget cut, the decrease was often around 20%. The decisive factor on the direction of the IT budget was often the level of exposure to the global financial crisis. Those with a high level have seen the highest budget cuts, those with low levels of exposure (or those profiting from the crisis) are seeing increases or flat IT budgets.

But as is often the case with statistics, they do not tell the entire story. What is becoming clear is that even those companies with increased IT budgets are looking to decrease their IT spend in as many areas as possible. Much of the interest in the region in cloud computing has actually come from the public sector - one of the sectors that has been relatively sheltered from the slowdown in IT spend. Virtualisation is on the agenda for nearly all companies, as they look to make better use of the hardware that they already have.

Reducing "human" costs through the reduced usage of contractors and IT services firms is on the agenda for many companies. The following figure shows the types of activities being undertaken by firms in Asia Pacific in attempting to reduce their IT spend. Please note that the averages in most countries are much higher - but the Chinese respondents to the survey bought the averages down, as they are taking fewer actions to reduce IT spend compared to enterprises in other countries.

IT budget cuts in Asia Pacific

% of Asia Pacific enterprises

Source: Forrester Research, 2009
 
As I have commented in other posts, I sincerely believe that the way we currently acquire, implement, manage and run IT is changing. IT departments, driven by better knowledge, and greater demands from the business, will no longer settle for "business as usual" style IT implementations. Across Asia Pacific we have already witnessed a considerable increase in the ROI bar for IT projects - and companies are also demanding quicker time to value for their IT spend. These facts won't change when the world economy recovers. The expectation for IT has now been set that business wants to do more with less. I believe it will be some time before we see the "IT arms race" style spending that we have witnessed over the past decade or so. While I am certain IT spend will continue to increase sooner rather than later, value received on that spend will be expected to increase at a faster rate than ever.

IT leaders across the Asia Pacific region are in for a roller coaster ride over the next few years as we drive greater value from our IT spend - we will most likely be dealing with different sets of IT vendors, or at least the solutions we buy from our traditional vendors will be very different from what we are used to buying. We can expect our IT sourcing strategies will change dramatically as we challenge our suppliers to provide greater value. I truly enjoy the conversations I'm having with IT buyers at the moment about looking for new ways to "do IT" - and expect many more of them in future. IT buyers across the region are challenging the status quo. It's great to see!

Do you have any experiences you are willing to share, or ideas on how companies can drive greater value from their IT spend (or do you disagree with my comments)? Please feel free to e-mail me, or submit a comment below.