Executive Briefings

IT to See Small Budget Hike in 2013 Despite Operational Cutbacks, Survey Says

IT organizations can expect to see small increases in operating budgets for 2013, even as cutbacks continue across other parts of business services, including finance, HR and procurement, according to new IT key issues research from The Hackett Group Inc.

The study found that the IT budget increases are in part being driven by increased demand and expectations, as IT organizations are being asked to respond to the new "borderless" business environment by building out a flexible, virtual, data-enabled model for service delivery. IT will play a key role as companies seek to fundamentally improve how they collaborate, make decisions and execute operations.

The Hackett Group's research identified three imperatives that shape IT strategy and the IT agenda for 2013, as companies seek to reduce complexity, improve analytics, and solidify their strategic contribution to the organization. IT leaders are seeking to demonstrate their impact on the business, both as a backbone of global operations and as an enabler of new revenue-generating capabilities. They are driving business-enabling innovation, in support of the new borderless business environment. Finally, IT leaders are seeking to future-proof their service delivery model, rethinking their role as companies become more global and focusing less on building technology and more on enabling capabilities.

"IT priorities for 2013 are being driven by the dramatic shift we're seeing globally, " said John Reeves, The Hackett Group's Global IT Advisory Program Leader. "Externally, companies are realizing that growth will come by expanding beyond traditional borders, whether that be new geographies or new forms of business relationships with their customers. Internally, functional borders between business services operations are also coming down in the wake of cross-enterprise, end-to-end process ownership. Finally, there are dramatically fewer barriers to service delivery placement, with global business services operations able to provide seamless support to internal customers.

"These changes are driving pressure on IT organizations to play a larger role, to be operationally flexible, reduce overhead, and increase customer satisfaction to counter market volatility," said Reeves. "IT needs to move beyond its traditional role as a cost center and focus on business enablement. To truly optimize for the new 'borderless business environment,' it's key that IT help companies drive towards one view of their products/services, their customers, and their financials. This is something that most companies still find tremendously challenging."

The Hackett Group's research found that organizations are expected to experience a small increase in IT investments, with operating budgets rising just over 2 percent in 2013. While the planned increase in IT investment is modest, it is significant compared to other business services, which anticipate the need for both cost reductions and staff cuts. Reductions in IT staff of less than 1 percent are expected, but these are minimal compared to some other business services functions, such as finance, where a reduction in force nine times larger is expected.

The Hackett Group's 2013 IT Key Issues Study, entitled Enabling Borderless Business Services: IT's Key Issues of 2013, is available, following complimentary registration, click here.

Source: The Hackett Group

The study found that the IT budget increases are in part being driven by increased demand and expectations, as IT organizations are being asked to respond to the new "borderless" business environment by building out a flexible, virtual, data-enabled model for service delivery. IT will play a key role as companies seek to fundamentally improve how they collaborate, make decisions and execute operations.

The Hackett Group's research identified three imperatives that shape IT strategy and the IT agenda for 2013, as companies seek to reduce complexity, improve analytics, and solidify their strategic contribution to the organization. IT leaders are seeking to demonstrate their impact on the business, both as a backbone of global operations and as an enabler of new revenue-generating capabilities. They are driving business-enabling innovation, in support of the new borderless business environment. Finally, IT leaders are seeking to future-proof their service delivery model, rethinking their role as companies become more global and focusing less on building technology and more on enabling capabilities.

"IT priorities for 2013 are being driven by the dramatic shift we're seeing globally, " said John Reeves, The Hackett Group's Global IT Advisory Program Leader. "Externally, companies are realizing that growth will come by expanding beyond traditional borders, whether that be new geographies or new forms of business relationships with their customers. Internally, functional borders between business services operations are also coming down in the wake of cross-enterprise, end-to-end process ownership. Finally, there are dramatically fewer barriers to service delivery placement, with global business services operations able to provide seamless support to internal customers.

"These changes are driving pressure on IT organizations to play a larger role, to be operationally flexible, reduce overhead, and increase customer satisfaction to counter market volatility," said Reeves. "IT needs to move beyond its traditional role as a cost center and focus on business enablement. To truly optimize for the new 'borderless business environment,' it's key that IT help companies drive towards one view of their products/services, their customers, and their financials. This is something that most companies still find tremendously challenging."

The Hackett Group's research found that organizations are expected to experience a small increase in IT investments, with operating budgets rising just over 2 percent in 2013. While the planned increase in IT investment is modest, it is significant compared to other business services, which anticipate the need for both cost reductions and staff cuts. Reductions in IT staff of less than 1 percent are expected, but these are minimal compared to some other business services functions, such as finance, where a reduction in force nine times larger is expected.

The Hackett Group's 2013 IT Key Issues Study, entitled Enabling Borderless Business Services: IT's Key Issues of 2013, is available, following complimentary registration, click here.

Source: The Hackett Group