APAC IT budgets rise says survey

Stan Beer
Thursday, 06 October 2005 11:00

IT Industry - Market

A new survey across enterprises in Japan, Australia, New Zealand, China, ASEAN countries, South Korea, India, Taiwan, and Hong Kong found that IT budgets at enterprises with at least 1,000 employees are rising, with firms in India leading the way.

Research group Forrester , which conducted the survey, found that security will be the most critical theme during the next 12 months, and consolidating IT infrastructure and systems management will also be high priorities.

Many of the Asia Pacific IT shops are organised in the same way as their North American and European counterparts: 59% of shops are centralised; 68% of firms with 20,000 or more employees use steering committees to oversee IT; and improved productivity is the most important goal for IT. The percentage of firms spending on IT services comes close to matching North American levels. Many are interested in technologies like open source software, Linux, and Organic IT, but adoption remains low relative to North America.

Executives who are actively involved in shaping IT budgets were asked about the state of their spending and industries in 2005 and the result showed that:

The majority have a positive industry outlook. Overall, 53% of firms expect the next 12 months to be good for their industry, while only 14% expect an extremely challenging year. However, there is little consistency among countries. Only 7% of South Korean firms expect an extremely challenging year, while 44% of Indian firms expect such a situation. Given the relative strength of each economy — India is posting record growth, whereas South Korea struggles to find solid economic footing — these distinctions may be more cultural than empirical.

IT spending was expected to rise in 2005. 36% of Asia Pacific enterprises have increased their spending above 2004 levels, while only 17% have decreased spending. This increase is led by firms with 1,000 to 4,999 employees, of which 38% have increased IT budgets and 16% have decreased budgets. Increases are pronounced in India and ASEAN, while South Korea is the only country to show net budget decreases. These findings are consistent with reported IT vendor revenue in the region — revenues are up 6% for Q2 2005.

Basic priorities top IT wish lists. Basic IT priorities such as security, consolidating infrastructure, systems management, and application integration top the list of IT priorities for the next 12 months. Less critical priorities — open source software, IP telephony, and grid computing — found their way to the bottom of the list. In general, developing economies like India and China were more likely to view the basic priorities as critical, while more mature economies like Japan and Hong Kong are focused on less critical priorities.

IT shops are geared to support productivity. Improving workforce productivity was on average the highest priority for Asia Pacific IT shops, while improving IT's credibility and project performance came in a close second. IT in this region is least worried about helping acquire and retain customers or driving new market offerings.