With businesses either holding back, or reducing spending on IT and looking to get a more cost-effective bang for their buck, it seems that many of New Zealand’s CIOs are giving precedence to spending on mission critical projects over non-mission critical projects.

With many organisations revising their IT systems and business processes, within their business planning for the next financial year, in order to optimise their cost structure and,  the next five years is expected to see only a relatively modest growth rate  in IT services spending , with a compound annual growth rate (CAGR) of  3.8 percent.

According to IDC’s latest report, the overall market for IT services spend is forecast to reach NZ$3.2 billion in 2013, with outsourcing alone representing a NZ$1.3 billion “opportunity” in 2009.

IDC’s senior services analyst for New Zealand, Rasika Versleijen-Pradhan, says that while the market remains rather shaken with the current economic uncertainty, and sales cycles have increased in length, “motivation to spend on IT will largely be governed by the need for service vendors to understand what the real customer experience of current systems and platforms are, and to what extend would it take to significantly improve their experience in terms of performance.”

IDC expects a large proportion of IT services spend long-term will be in the areas of converged communications, improving information sharing leading to faster decision making, and transformational infrastructure, and according to Versleijen, “new and improved delivery models, such as cloud computing and technologies around virtualisation, will further help to facilitate the uptake of technology investments that would otherwise be considered too costly.”

According to IDC co-author of the report, Adam Lee, what we’re seeing now is a period where “information is power,” and he says there’s a significant uptake in areas of knowledge management and collaboration.

“Enterprises are heavily relying on business intelligence and analytics in this time of high uncertainty. Microsoft SharePoint, Cisco WebEX, and SAP all-in-one are a few of the popular solutions."

In its report, IDC also says that infrastructure services in New Zealand, such as business continuity, security and storage, are expected to reach NZ$1 billion by 2013, and Lee says “helping customers improve the protection of their enterprises is a virtue and a likely source of increased customer loyalty.”