Businesses still list cutting IT costs as a top priority, even though further cuts could put business at significant risk, research and consulting firm Meta Group says in its 2003 Worldwide IT Benchmark Report.
Most of the budget cuts involve staffing and discretionary cuts.
While other reports have predicted a rise in IT spending into early 2003, Meta Group believes the spending increase will be an "artificial bump".
Johan Theron, director of Meta Group South Africa and Meta Group Consulting Africa, says IT spending only appears to be on the rise as a percentage of revenue. "IT spending is standing still as most organisations have hit the wall on cost reduction," he says.
The report says many companies have required their IT organisations to focus on non-discretionary costs and reduce discretionary spending. Meta Group says businesses now run the risk of increasing the strain on ageing systems.
Theron says the report`s findings also indicate that IT spending has increased in infrastructure development, with the biggest cutbacks in staffing.
"IT organisations spend 57% of their budget on 'run the business` costs (non-discretionary), 21% on "grow the business" projects (discretionary), and 22% on "transform the business" projects (discretionary)."
Storage report
In another report, "Enterprise Storage: Technology Adoption and Deployment Trends", Meta Group says the demand for data storage is showing no signs of abating and that IT organisations are turning to new approaches for managing storage volumes.
The study indicates that 60% of IT organisations will turn to enterprise storage consolidation solutions to improve utilisation, lower the cost of ownership and increase the return on storage investments. Respondents also expect a 90% growth rate through 2004.
The report says backup and recovery remains the number-one spending priority, with return on investment the main challenge for storage consolidation initiatives.
CRM evaluation
Meanwhile, the latest Metaspectrum evaluation covering the customer relationship management (CRM) consulting services market, says clients have little confidence in CRM service providers.
Meta Group says clients that deferred CRM evolution in 2001 and 2002 will be more inclined to move ahead, resulting in CRM services growth of 5% to 6% in 2003 and 8% to 10% in 2004/5.
The analysis found that a major market shift occurred from mid-2001 to late 2002, with fewer clients investing in enterprise-wide CRM endeavours but going ahead with smaller, shorter and more tactical projects instead.
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