2013 IT Budgets Hit Stalemate

By | Sep 7, 2012

2013 IT budgets look to have hit a stalemate, according to research conducted across Europe by IDG Connect. The research shows that for the coming year, IT business and decision-makers were almost evenly split between supporting IT initiatives that either save money or make money, indicating a kind of stasis in the thinking of senior IT managers about the direction of their IT departments.

The global trend is toward keeping money in the coffers, with the Federal Reserve calculating an estimated $1.74 trillion is being held on the balance sheets of nonfinancial companies as liquid assets--$12.6 billion more than at the same time last year. This has a trickle-down effect to internal investment and development, and IT seems to be paying a high price.

In times when the economic climate is not so fearful, extra money on the balance sheet is typically invested into departments like IT, where innovation and technological advancements can be implemented and take a company forward; the risk and upfront costs are seen as worth the initial capital investment. Nowadays, this seems to have almost ground to a halt, with a stalemate of 37 percent to 34 percent of IT decision-makers prioritizing making money versus saving money respectively. Furthermore, according to the IDG Connect research, 72 percent of the more than 750 senior level IT professionals surveyed said they would not be expanding their IT department, and 80 percent said that their 2013 IT budgets would remain the same as in 2012.

This stasis holds both a warning and an opportunity for IT managers at midsize firms. In an environment where larger firms are hoarding their cash and stifling internal investment, midsize firms and smaller businesses have an opportunity to move forward with their IT development and outpace larger rivals, giving them the space to achieve a competitive edge that rarely comes around. This is, of course, dependent on businesses having the wherewithal to invest in their IT departments and on IT decision-makers having a strong enough relationship with CFOs to put forward the case for investment into IT.

The flipside is that most midsize firms will be feeling the same squeeze as their larger competitors, and the urge to cash hoard is contagious--the trend is spreading globally and even hitting previously "unassailable" economies like India.

For IT decision-makers at midsize firms, the key to grasping the opportunity present in current circumstances is to take a proactive role in developing IT strategies that align with overall business goals and strategies. Show business and financial decision-makers how investing in IT can take a company forward, and that innovation in this area can actually break out of the current stalemate, with solutions that can both save and make a company money at the same time.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. Like us on Facebook. Follow us on Twitter.

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