Forecast 2014

Forecast 2014: How to wring value from your IT budget

Hosted services will reign in 2014, but IT leaders will be challenged to accomplish everything while still containing costs.

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Computerworld's survey showed a slightly higher average IT budget increase of 4.4% for 2014. And Forrester Research is even more optimistic, predicting that U.S. IT budgets will increase 6.7% in 2014, with spending on software, the cloud and analytics rising and hardware expenditures falling. Forrester analyst Andrew Bartels says his firm based its outlook on expectations that the U.S. economy will improve in 2014, exports to China, India and Europe will increase, and many companies will be itching to buy new technologies.

"Cloud, mobile, smart technologies are all very desirable, and we're finding that as companies are prioritizing those -- and as the economy improves -- they'll have more room to spend on that," Bartels says.

But while IT budgets are growing, and goals center around improving service levels, productivity and customer satisfaction, containing costs is still the No. 1 business priority for 65% of Computerworld's survey respondents, and about a quarter of survey takers cite budget constraints as the biggest leadership challenge.

As always, the pressure is on for IT to do more.

The Big Squeeze

These days, IT is being squeezed from all directions. Two years ago, Texas A&M University-Kingsville underwent massive spending cuts that slashed its IT budget by almost 22%. But with the economic downturn also came 25% enrollment growth, which often happens when unemployed people decide to learn new skills.

"Now our departments are looking to us for how to handle the increase when they [also] have less staff," says Robert Paulson, CIO and associate vice president of technology. But with the university's IT budget rising only 3% in 2014, "it puts more demands on technology and using technology wisely," he adds. "Now we're looking at long-range budgets, and it seems very difficult to get that IT money back."

To help out the 30-person IT staff, almost a quarter of the $4 million IT budget will go toward hosted systems, managed services, and consultants and consulting services.

While hosted services certainly help with staffing, Paulson has little evidence that they save money. "We're doing it for the skills and the personnel we don't have. That is what I've seen at other places, too," he says. "We're looking at augmentation -- somebody to come in and help us get to where we need to be."

Indeed, IT departments that use services report that, more than saving money, the approach frees up people for mission-critical work, fills skills gaps and improves efficiency. Whether IT can better meet their goals by shifting to more managed services remains to be seen, but survey takers are certainly giving it a try.

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