Digital, Software Defined Networks, and Cybersecurity are Driving IT Spending in 2015

Key highlights from a recent biannual survey of 300 US and European IT decision makers spread across multiple industry verticals and representing enterprises of various sizes, are outlined below-

  1. IT Spending Sentiments Improving, Driven By Europe- 59 per cent of respondents indicated an increase in IT spending, as compared to 56 per cent in the November 2014 survey. The improvement in sentiments appears to be driven by Europe, where 65 Per cent of respondents (highest in last five surveys) expect IT spending to increase, as compared to 59 per cent in the last edition. Sentiment in the United States appears to be unchanged compared to the end of 2014, with the same number of respondents expecting an increase in IT spend.
  1. Shifts In IT Spending Priorities- Priority shifts away from reducing costs and improving efficiency toward updating legacy systems and strengthening network/internet security. The responses varied slightly across enterprise size, with reducing costs and improving efficiency was ranked high only amongst small businesses (1-50 employees), while strengthening network/internet security was ranked highly among medium (51-250 employees) and large enterprises (251-1,000 employees). The shift away from reducing costs and improving efficiencies suggests an improvement in the economy is resulting in movement towards evolved uses of IT.
  1. Software Continues to be No. 1 Priority- Software, IT Services, and Networking remained the top three priorities. Within software, top priorities identified were mobile technologies, Windows upgrades, IT operation management, and cloud computing, in addition to data center modernization and virtualization.
  1. IT Services Budgets Continue To Move Away From Cost Reductions To “Investments”- IT budget shift from cost reduction to “investments” augers well for growth of digital (social, mobility, interactive) business. Survey results also depicted increased demand for cybersecurity related spending.
  1. Cloud Computing Adoption Increasing- The number of public, private, and hybrid clouds deployed continues to show steady growth, with 66 per cent of the respondents having deployed some form of cloud technology, versus 61 per cent in November 2014 and only 32 per cent in June 2013. Public cloud adoption is highest among medium sized businesses and lowest among small business respondents. More than half the respondents were willing to shift up to 50 per cent of their storage to public cloud systems, and declines were recorded in the number of respondents who have none of their storage in public cloud.
  1. Software Defined Network Activity Increasing, Can Reduce Traditional Network Spending- The survey suggests that SDN activity appears to be slightly improving, with 13 per cent of the respondents suggesting they had deployed a solution and 28 per cent evaluating the technology today. Not surprisingly, larger customers, which are more likely to maintain private data center facilities, showed a much higher level of interest in SDN, with 24 per cent having deployed, and 39 per cent in the evaluation stage. However, number of respondents who believe SDN would reduce network spending increased from 29 per cent to 36 per cent.
  1. Pcs In Decline, Tablets Join The Bandwagon Too- Consumers continue to move away from hardware investments. The interest in PC upgrades is declining, with only 30 per cent of respondents planning to upgrade their systems, as compared to 34 per cent who indicated to do so in November 2014. Small businesses continue to prioritize PCs, but the number of respondents noting PCs is not a priority increased to 26 per cent from 9 per cent in the last survey. Tablets too were ranked high priority by fewer respondents.

Given the above findings, I believe Indian technology players can look to an improving demand scenario in the next 6 months. I also expect to see increased investments and solutions around digital, software defined networks, and cloud, in addition to increased focus on Continental Europe.

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