Another Analyst, Nucleus Research, Has Optimistic Outlook on IT Spending

Last week I wrote a post about an InformationWeek survey that found budget pressures easing for IT executives on its InformationWeek 500 list of companies, seemingly confirming expectations of IT spending growth from Gartner and IDC. A Nucleus Research survey of 220 U.S. companies yielded similar results, with half of those companies saying they plan to increase IT budgets next year. One in 10 respondents are set to increase IT spending by some amount in double figures.

That’s good for technology pros, right? Yes, but with a caveat. From a summary of the research available on the Nucleus Research website:

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Rather than invest in hiring, retaining, and potentially paying the costs of laying off staff, companies are choosing to invest in technology to improve customer service and support, analyze data for better decision making, and generate more productivity from the employees they still have.

Companies also like the idea that technology management costs are — in theory — easier to predict than work force expenses, according to the summary. I’ve written about this topic a number of times, wondering last summer if companies might increasingly opt for automation over outsourcing as a cost-saving measure. That post included a quote from an HP executive, who said, “… The next five to 10 years is all going to be about who can best use technology to automate the delivery of services.”

Nucleus is bullish on cloud computing, largely because of its ability to help companies shift spending from capital-intensive infrastructure investments toward more operating expenses, which results in tax benefits. Subscription-based pricing also “has made it theoretically easier for companies to scale the number of licenses based on changing business needs.”

Nucleus lists cloud implementations as one of five recommended IT spending practices. The other four:

• Using more commercially developed applications in lieu of costlier custom apps when possible. When custom apps are needed, employ agile development techniques.
• Utilize real-time asset management software to reduce the number of redundant applications and lower maintenance costs. I’ve posted about this a number of times too, once writing companies shouldn’t treat their IT assets like junk food.
• Use integration technologies when feasible to bring disparate data together in a single view, and/or consider giving users lightweight analytical tools. Both strategies will help companies cut costs associated with IT organizations producing custom reports.
• Revisit the idea of IT training, dropping basic refresher courses, limiting classroom training and negotiating for vendor-provided training to be included in contracts.