Technology | Media | Telecommunications

Friday, July 03, 2015

How the Savvy CIOs are Doing More with Less Budget

Enterprise spending on Information Technology (IT) budgets will reach a combined worldwide total of $3.5 trillion in 2015 -- that's a 5.5 percent decline from 2014, according to the latest market study by Gartner. Regardless, smart CIOs are undeterred and are meeting their objectives -- they know how to optimize their budget spend.

Gartner's analysts attribute the current decline to the rising U.S. dollar. But there are clearly several other logical reasons why business technology spending is in a state of flux. One obvious reason is the growing movement towards Open Source technologies.

In constant-currency terms, Gartner says the market is projected to grow by just  2.5 percent. Back in their previous forecast during April, they had forecast IT spending to decline 1.3 percent in U.S. dollars and grow 3.1 percent in constant currency.

Communications services will continue to be the largest IT spending segment in 2015, with spending at nearly $1.5 trillion. However, this segment is also experiencing the strongest decline.

In the device market, smartphones continue to be the leading segment. But, according to Gartner's latest assessment, overall smartphone unit growth will start to flatten throughout the year.

The PC and media tablet market continues to weaken. The expected 10 percent increase in average PC pricing is going ahead, thereby delaying purchases even more than expected. Moreover, the ongoing adoption of low-cost Chromebooks is likely to be a key factor in the current trend.

Enterprise budgets for data center systems in local spending are expected to remain stable for the year, with some CIOs extending life-cycles and deferring replacements as a means of offsetting the price increases of the legacy hardware vendors.

Enterprise software spending is forecast to decline 1.2 percent in 2015, with revenue totaling $310 billion. Gartner analysts said many of the legacy software vendors wont try to raise prices, because software as a service (SaaS) is about trying to maintain market share, not their profitability.

Gartner believes that raising prices could take the troubled legacy software vendors out of consideration. Meanwhile, vendors offering affordable open source software subscriptions are continuing to experience gains -- at the expense of the traditional proprietary software licensing models.

IT services spending in 2015 is projected to decline by 4.3 percent. Gartner expects modest increased spending on consulting in 2015 and 2016. Forward-looking growth for professional services is particularly related to demand for digital business transformation projects.

Increasingly, buyers prefer solutions that minimize time and cost of implementation, driving demand for more-efficient delivery methods, out-of-the-box implementation, and lower-cost solutions.

That being said, training and consulting services for OpenStack deployments are still in high demand, as more organization embrace an open hybrid cloud computing architecture for their IT evolution. Furthermore, open source Platform as a Service (PaaS) cloud offerings are also experiencing strong growth.