IT Budgets in Asia Pacific Under Pressure

IT budgets for 2013 in Asia Pacific are in better shape than in the rest of the world, but not by much, according to a new report by Forrester Research, Inc.

 

Although 18% of organisations in the region will increase their IT spending by 7% or more in 2013, most CIOs in Asia Pacific are coming under far more budget pressures than in previous years. Overall, less than half (45%) of Asia Pacific organisations will increase their IT spending in 2013, and almost one-quarter (21%) will reduce their IT capital spending.

 

In addition, Asia Pacific CIOs now directly control less than 60% of enterprise IT spending. IT groups in Asia Pacific account for 58% of IT purchases in 2012 — down from 2010, when they purchased 74% of their organisation’s IT.

 

In contrast, Forrester’s data shows that business leaders are often growing their IT spending at very healthy rates even as CIOs deal with budget reductions.  Business leaders focused on business outcomes and innovation directly controlled 33% of regional enterprise IT spending in 2012 -- a share that is growing quickly.

 

“Time is running out for CIOs to partner with the business,” writes Dane Anderson, Vice President, Research Director and Asia Pacific Manager at Forrester Research. “Emboldened business leaders across Asia Pacific are increasingly driving reorganisation and retraining efforts to extract greater value from their technology.”

 

Consistent with the pressures CIOs face, the research findings show that the top two technology initiatives prioritised by IT departments across Asia Pacific are budgetary related: 54% cite ‘improving budget delivery performance’ as a priority, while 52% cite ‘improving IT budget performance’.

 

In comparison, ‘data and analytics to improve business outcomes’ ranks as business leaders’ top IT priority for 2013, while it came in third for IT leaders. More importantly, the top reason that business leaders are spending more on technology is because they believe that it’s too important for the business not to be involved.

 

Interestingly, the regional story in Asia Pacific has two distinct categories that break along the fault line between emerging and developed markets.

 

Singapore is the second closest to North American spending patterns among Asia Pacific markets, just behind Australia.

 

Spending 5.8% of revenue on IT, organisations in Singapore prioritise technology as much as their peers in developed economies around the world, but similarly suffer from slight growth expectations for 2013.

 

While IT budgets in Singapore will not grow as fast as China or India, 35% of organisations in Singapore plan to increase spending in 2013, close to double of organisations (18%) that plan to decrease it.

 

As if slow budget growth weren’t enough, CIOs in Malaysia and Indonesia are starting from smaller bases than their peers in more developed markets.

 

The report also reveals that Malaysian organisations spend 3.7% of revenues on IT, while Indonesian organizations spend 4.2%.

 

On the bright side, the share of organisations increasing their IT budgets by more than 10% is especially high in the Philippines (12%), just behind China (14%) and India (19%).

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