Forecast 2015: IT spending on an upswing

It’s IT budgeting time for 2015 — and Barr Snyderwine is reaching for the stars.

“I’m going to present over 20% in increased IT spending” to the executive team, says the CIO at Hargrove Inc., a trade show and event services company in Lanham, Md. “I’m going to present everything I think we should be doing.” On his wish list? Mobile technologies that will make it easier to access floor plans and information from the trade show floor. Those technologies will have to be integrated with internal workflow systems “so it’s a little harder [and more expensive] to roll those out,” Snyderwine explains.

He’s also throwing in some “teasers,” such as a request for 100 Microsoft Surface tablets. “Those are fabulous devices, but a little pricey. We deal with a lot of graphics, so to put them on tablets at show sites, blow them up, see them and [manipulate] them — that could be a really killer app for us,” Snyderwine says. He admits that the use case for such a splurge “isn’t there yet,” but he figures “it’s worth putting out there.”

When it comes to new technology, business leaders don’t know what they don’t know, he says. Therefore, it’s part of his innovation strategy to make all parts of the organization aware of new technologies that can improve business processes and bring in new customers. And why not? With the economy slowly improving, IT leaders are more optimistic that corporate purse strings will loosen up in 2015, and they’re eager to bring new technologies into the fold in addition to just keeping the lights on.

Computerworld’s annual Forecast survey of IT executives shows that IT budgets are indeed continuing to make a nice recovery. Some 43% of the 194 respondents said that they expect their IT budgets to increase. That’s up from 36% in last year’s study. This year’s average anticipated uptick is 13.1%, and overall, the expected changes in IT budgets reported by all respondents average out to 4.3%. IT is expected to again kick up spending on security tools, customer-facing technologies and information exchange/collaboration technologies that comprise the so-called SMAC stack — social and mobile tools, analytic systems and cloud computing. Meanwhile, it’s likely that hardware spending will continue to drop and services budgets will continue to rise.

Here’s a look at what IT leaders say is on tap for 2015.

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1. Security

High-profile security breaches at Home Depot, Target, Michaels and myriad other companies — along with the explosion of mobile technologies — have propelled security spending to the top of the IT priority list for 2015. Nearly half (46%) of the IT leaders who responded to our poll said that they will invest more next year in access control, intrusion prevention, identity management, and virus and malware protection. “Whenever there are these high-profile incidents, it does tend to drive IT security spending even more quickly than it already was,” says Stephen Minton, an analyst with the IDC Global Technology and Industry Research Organization. Security spending has been a constant growth area for the past decade — rising at double-digit rates every year, he adds.

Balancing security and agility are top spending priorities for next year at Georgetown University in Washington. That’s a tall order considering the IT department endured a 5% spending cut in 2014 and will see no new funds next year. But by squeezing out IT efficiencies and centralizing some functions, the department was able to free up several million dollars for new projects.

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“We get roughly 45 million hits against our network on a yearly basis,” says CIO Lisa Davis. “We know that we’re a target — in terms of higher education and being on an unclassified network — so we have to be very diligent in how we’re managing [security]. But at the same time, we want to bring agility and have the freedom and openness that we want to support our academic and research environments.”

So Davis says that she’s focusing a portion of her budget on a more proactive security posture that includes investing in a FireEye threat prevention platform that will “allow us to be responsive to security threats on our network so that we really understand what’s going on.”

2. Cloud Computing

Companies continue to move away from big infrastructure investments in favor of cloud-based systems. More than 40% of the respondents to the Computerworld Forecast survey said that their organizations will spend more on software as a service (SaaS) and a mix of public, private, hybrid and community clouds in 2015.

Nevitt & Associates, an agricultural asset management company in Queen Creek, Ariz., will increase IT spending by 15% in 2015 after two years of flat budgets, says CIO David Dodds. As much as half of next year’s IT budget will go toward licensing for cloud-based offerings such as Microsoft’s Office 365 software suite and Dropbox’s file hosting service.

“I want to be the IT guy who’s out of the IT business,” Dodds says. “I don’t have to have servers, and [employees can] bring whatever computer they have or I’ll just buy them a Chromebook. We can connect to a virtual desktop that’s always ready, clean, updated and secure — and all I have to worry about is my Internet connection.” He says he hopes to see his dream become reality in two years, but right now most of his IT dollars are still spent “just trying to keep the lights on.”

For many companies, migrating to the cloud doesn’t require new IT dollars — just a shift away from infrastructure spending. “When companies move things to the cloud, they’re spending less on traditional on-premises technology. So instead of buying their own servers, storage and systems, they’re buying infrastructure as a service or software as a service,” says Minton. There are exceptions, though. Small and midsize companies — which may have the most to gain from the increased capabilities and lower maintenance needs of hosted systems — would require budget increases to move to the cloud. “So it does drive some new spending,” he adds.

3. Business Analytics

Big data is still a big deal for enterprises. Some 38% of the IT executives we surveyed said they will dedicate IT dollars to enterprise analytics, data mining and business intelligence in the coming year.

“The theme for IT spending in 2015 is all around digital business,” says Richard Gordon, a U.K.-based Gartner analyst. “So you’re seeing spending in things like analytics. There’s a wave of data coming from customers and social media. And as the Internet of Things rolls out, there will be even more information on customers. Businesses are scrambling to figure out how they can extract value from that information.”

Georgetown’s Davis says higher education is just beginning to understand the value of big data and how to use analytics. In 2015, the university will marshal the resources and dollars necessary to kick off an enterprise CRM project that will include a business intelligence and analytics platform from Blackboard Inc.

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Davis says the Blackboard tools will allow Georgetown to follow students’ data threads while they’re enrolled as undergraduates and after they become alumni. “We’ll be able to leverage those data sets so we understand what our undergraduate students are doing, what activities they’re in and who they’re networking with until they graduate,” she says. When they’re out in the worlds as alumni, the university will be able to track their careers and “determine the likelihood of them giving back to the institution,” she adds.

4. Application Development

More than one-third (38%) of our respondents said that they will spend money on developing, upgrading or replacing applications, including mobile apps. At trade show company Hargrove, Snyderwine says he plans to spend the largest chunk of his 2015 IT budget (30%) on application development.

Customers visit the Hargrove website to order carpeting, chairs and labor for their displays, and he says “it’s time for a refresh” of the company’s three-year-old customer-facing app. Snyderwine says he wants to build new apps and upgrade others to get more functionality and a “modern Windows 8-type interface,” and he will probably use a third party to do that. “I need different skill sets that I don’t have in-house, so I’m going to outsource a lot of that,” he explains.

For its part, Cross Country Home Services, a Sunrise, Fla.-based home warranty provider, plans to increase IT spending 10% to 15% next year as it ventures into new lines of business and the consumer channel. One of its top priorities will be developing mobile apps for its traditional and new offerings.

For instance, the company’s new total home management website, TotalProtect.com, can be used on mobile devices, but “it’s a different experience than using a mobile app,” says CIO Joel Steigelfest. “We want people to be able to enroll or initiate a claim through their mobile device, so we’re doing more of that kind of investment,” he explains.

5. Wireless/mobile

Mobile spending rounds out the top five budget items for 2015 identified by respondents to the Computerworld Forecast survey. Some 35% of the respondents said that their organizations plan to invest in RFID technology, remote access tools, Wi-Fi, mobile/wireless devices and mobile device management systems. “There’s a lot of investment around not so much the devices now, but more on the infrastructure and custom application development,” Minton says. Companies also plan to spend on technology to support bring-your-own-device programs — most notably the systems necessary to provide secure mobile access to internal systems, he adds.