Report: Non-Tech Execs Have Say In Growing IT Budget

Cross-functional committees in companies around the world are playing an integral role in setting IT direction.

August 4, 2004

2 Min Read
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Top-level, non-technical business executives are playing a growing role in IT, say analysts at Forrester Research. And in so doing, a more strategic perspective is being applied to the enterprise technology decision-making process

According to a new survey, cross-functional committees in companies around the world are playing an integral role in setting IT direction. At the same time, these groups are thinking more strategically about IT, demonstrated by an increase in the percentage of IT budgets going toward both new IT investments and R&D from 2003 to 2004.

Many North American and European enterprises require CEO sign-off on new IT investments " 31 percent and 38 percent respectively.

Governance by committee has become the norm " 67 percent of large companies have committees of senior business leaders that oversee and prioritize IT investments.

Business units play a role in purchasing enterprise applications that directly affect their business processes " such as CRM, HR, finance " and are often involved in vendor selection. Twenty-six percent of enterprises include their business units in selecting software vendors, while 21 percent help select IT consulting vendors.IT Spending Outlook Bright

As enterprises enter the 2005 budget season, Forrester asked technology executives about spending plans for the coming year. Overall, 37 percent will spend more on IT in 2005 than in 2004, led by large North American businesses and financial services firms. Only 15 percent of respondents expected to decrease their IT spending in 2005.

In addition, the findings revealed that the respondents had similar sentiments regarding spending priorities and vendor management, including the following:

Compared with their North American counterparts, European enterprises spend a higher percentage of their IT budget on new investments and R&D, and they spend a greater percentage of their revenues on IT.

European enterprises are spending 37 percent of their IT budgets on new investments, compared with 30 percent for North American enterprises.On average, 36 percent of budgets for new investments are not earmarked for a specific project.

Allocations for R&D increased to 6.2 percent of IT budget in North American, but that still lags behind the 8.5 percent allocated by European enterprises.

The percentage of company revenue spent on IT is similar in both geographies " 4.8 percent in Europe and 4.2 percent in North America.

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