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Business-Led IT A Key Driver In Shifting Corporate IT Investments For 2016
CIOs Predict Modest Rise of Two Percent in Budgets, According to CEB

ARLINGTON, Va., Nov. 10, 2015 /PRNewswire/ -- CEB (NYSE: CEB), a best practice insight and technology company, today released findings from its 2016 IT budget and benchmark survey showing that corporate IT budgets are expected to grow by just two percent in the coming year. IT capex growth is slowing driven in large part by an uptick in business-led IT – information technology spending made by those outside of IT. Increased investments in cloud and a decrease in infrastructure spending contributed to smaller IT capital budgets.

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The budget outlook for 2016 marks the most modest projected growth since 2012, but for specific categories within IT, the picture is more mixed. Growing concerns around high-profile data hacks mean that security budgets are expected to continue steady upward growth, from 5.2 percent of the budget to 6.2 percent. Meanwhile, IT staff increases are anticipated to be the highest since the recession at 1.9 percent.

The increased focus on business-led IT means that CIOs and their teams are operating in a more advisory capacity, as employees outside of corporate IT make more technology decisions and investments than ever before. In 2015, spending patterns among IT functions diverged significantly, with IT organizations that still own delivery of most technology projects growing their budgets by 5.1 percent. IT departments that more frequently serve as advisors – known as Adaptive IT organizations – saw their budgets contract by 2.3 percent.

Shrinking IT budgets in Adaptive IT organizations do not represent negative enterprise technology spending, but rather a healthy sign of IT's ability to support technology decision-making in the rest of the business. In fact, Adaptive IT organizations enable the growth of technology spending across the rest of the enterprise. They spend around 30 percent more on analytics, usability, personalization, and collaboration and take a more flexible approach to budgeting, allowing them to re-allocate twice as much of the IT budget as their peers in response to changing business needs.

Andrew Horne, IT practice leader at CEB said: "This slowing budget growth represents a tipping point in IT spending as organizations realize the benefits of adopting a more flexible, business-led approach to technology investment. CIOs are rethinking the way budgets are allocated to focus on the speed of response to the rest of the business. In 2016, we expect the IT function to ramp up its role as consultant, broker, and coach to the rest of the enterprise."

Other findings from the survey include:

  • Reducing customer effort is key: In 2015, 11 percent of the IT project budget was invested in improving usability. Looking to 2016, the role of user-experience designer will be installed into at least 50 percent of companies.
  • IT invests more in "Big Data:" Organizations allocated more budget to business intelligence in 2015 than in previous years and data scientists are expected to be present in the majority of companies by the end of next year.
  • Declining spending on core infrastructure and process automation: Spending on core infrastructure such as data centers and network declined three percent between 2013 and 2015 to 30 percent. Similarly, spending on enterprise process automation (e.g. ERP) fell from 32 percent of project budgets in 2013 to 30 percent today.
  • Flexible budgets have become normal. Eighty-one percent of companies had flexible budgets in 2015, this trend is expected to continue as greater support is needed to respond to rapidly changing business needs.
  • Deepening cloud investment. Almost all CIOs are allocating some budget to the Cloud. The depth of deployment has also increased as almost half of companies allocate at least 6 percent of total IT spending to cloud solutions.
  • Diversification of sourcing. Nearly one-fifth of technology vendors are new-to-world vendors and 40 percent support specific business niches, rather than provide broad ecosystems of solutions.

About CEB
CEB is a best practice insight and technology company. In partnership with leading organizations around the globe, we develop innovative solutions to drive corporate performance. CEB equips leaders at more than 10,000 companies with the intelligence to effectively manage talent, customers, and operations. CEB is a trusted partner to 90% of the Fortune 500, nearly 75% of the Dow Jones Asian Titans, and more than 85% of the FTSE 100. More at cebglobal.com.

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SOURCE CEB

Wunmi Bamiduro, @Wunmi_CEBNews, wbamiduro@cebglobal.com, (571) 303-4573