As we enter the final quarter of the year, CIOs across industries are putting the final touches on their 2019 IT budgets. A recent report reviewed some of the latest surveys on what those budgets entail, and the results provide telling clues about trends that will shape enterprise technology over the coming year. Here are three findings that we found particularly interesting.
1. Enterprise software is the fastest-growing IT category
In Gartner’s analysis of IT spending from 2017 to 2019, enterprise software emerges as the fastest-growing category in all three years:
Driven by competitive pressures and escalating customer expectations, CIOs are devoting a greater portion of their budgets to new and upgraded enterprise software. Their efforts can pay off ... as long as they integrate these applications within a well-functioning architecture. If data is disorganized, siloed, and inhibited from being shared across the organization, even the most advanced applications can only do so much to support business goals.
If your 2019 budget includes major expenditures on enterprise software, now is the time to ensure that your data and integration architecture is ready to support those new or upgraded applications. One of our clients in the technology industry needed a digital business strategy to help them adapt to a surge in demand for their products. We discovered that, due to a lack of data governance, they had amassed large amounts of redundant, inconsistent data, hampering their ability to leverage data as a strategic asset. Once we cleaned up their data and optimized their architecture, we were able to move forward with other strategic initiatives to support their growth.
2. Spending on on-site data centers is slowing
Gartner predicts spending in on-premise data centers will grow by just 1.1 percent in 2018–19 — down significantly from 2017’s growth rate of 6.3 percent (see chart above).
As we discussed in a recent Insight, many organizations are shifting data storage from on-site resources to the cloud because of predicted cost reductions. However, after the transition, many businesses experience “cost creep” that can erase any savings, eventually resulting in cloud infrastructures becoming more expensive than the on-site resources they replaced.
When we work with clients on moving data to the cloud, we take a mindful approach, starting with what they have today and building a strategy that can address current challenges and accommodate future variables. In working with one of our healthcare clients, for example, we discovered that it was more efficient to keep some of their data on site and create a real-time integration to access that data. We helped them avoid the high costs some SaaS platforms charge for storage by integrating their cloud applications with their on-premise applications to access data in real time.
3. Tech spending by lines of business (LOBs) will soon outpace IT department spending
The report cites an IDC study that revealed roughly half of business IT expenditures currently come from the budgets of technology buyers outside the IT department. LOB spending has grown faster than IT spending over the last several years and is predicted to show a compound annual growth rate (CAGR) of 6.9 percent over the 2016–2021 forecast period, compared to 3.3 percent CAGR for IT spending over the same time span.
As we explored in a recent Insight, the combination of overloaded IT departments and the availability of do-it-yourself tools has generated a surge in “citizen development” activity among LOBs — and the risks that come with it. Instead of an “either/or” scenario that sets IT and LOBs in competition with each other, we advocate an IT strategy that bridges the gap between the two. LOBs have the business knowledge and understand what they need to do, and IT has the technical expertise and the guardianship of compliance and security to help figure out how to enable the LOBs. A successful strategy will leverage the advantages of each while minimizing the risks.
If you’d like to learn more about the trends that are shaping enterprise technology in 2019 and beyond, give us a call.