2012 corporate it spending outlook db it investor call

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Brief overview of corporate spend data presented to investors in IT software and services organizations, with Deutsche Bank.

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2012 corporate it spending outlook db it investor call

  1. 1. INFORMATION TECHNOLOGY PRACTICE CIO EXECUTIVE BOARD TM2012 Corporate IT Spending OutlookAlexander StilleEuropean Research Director, CIO Executive BoardIn conjunction with5th January 2012
  2. 2. A FRAMEWORK FOR MEMBER CONVERSATIONSThe mission of the Corporate Executive Board is to create revolutionary economic advantage for leaders of the world’s great enterprises by enabling them to act with unparalleled intelligence and confidence. We lift theirperformance at key decision points and career moments by delivering insight drawn from the most powerful global executive and professional network. When we bring leaders together, it is crucial that our discussions neitherrestrict competition nor improperly share inside information. All other conversations are welcomed and encouraged. We look forward to the continued and robust sharing of insights by member executives and professionals atCorporate Executive Board events.COPIES AND COPYRIGHTAs always, members are welcome to an unlimited number of copies of the materials contained within this handout. Furthermore, members may copy any graphic herein for their own internal purpose. The Corporate ExecutiveBoard Company requests only that members retain the copyright mark on all pages produced. Please contact your Member Support Center at +1-866-913-8101 for any help we may provide.The pages herein are the property of The Corporate Executive Board Company. Beyond the membership, no copyrighted materials of The Corporate Executive Board Company may be reproduced without prior approval.LEGAL CAVEATThe CIO Executive Board has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, and the CIO Executive Board cannot guaranteethe accuracy of the information or its analysis in all cases. Furthermore, the CIO Executive Board is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed asprofessional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither The Corporate Executive Board Company nor its programs areresponsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the CIO Executive Board or its sources, or b) reliance upon any recommendation made by the CIOExecutive Board.CIO Executive Board, Information Technology Practice© 2011 The Corporate Executive Board Company. All Rights Reserved. 2
  3. 3. CIO Executive Board Support For IT Leaders and Their TeamsCIO Executive Board, Information Technology Practice 3
  4. 4. 2012 Corporate IT Spending Outlook Research IT Spending Staffing and Spending Trends Methodology Levels Sourcing TrendsCIO Executive Board, Information Technology Practice© 2011 The Corporate Executive Board Company. All Rights Reserved. 4
  5. 5. 2011-2012 Budget Benchmark Benchmarking Survey Process Data Set • 178 Companies participated in the benchmarking exercise • Of between $1 billion and $370 billion in revenue • Controlling total IT budgets in excess of $55 billion • Surveys completed / validated by Group CIO and IT CFOCIO Executive Board, Information Technology Practice© 2011 The Corporate Executive Board Company. All Rights Reserved. 5
  6. 6. Partial List of Organizations Participating in the BenchmarkCIO Executive Board, Information Technology Practice© 2011 The Corporate Executive Board Company. All Rights Reserved. 6
  7. 7. Participant Profile Respondents by Region Respondents by Business Strategy Percentage of Responding Organizations Percentage of Responding Organizations Respondents by Information Intensity Respondents by IT Adoption and Risk Profile Percentage of Responding Organizations Percentage of Responding OrganizationsN = 178 CIO Executive Board, Information Technology Practice © 2011 The Corporate Executive Board Company. All Rights Reserved. 7
  8. 8. 2012 Corporate IT Spending Outlook Research IT Spending Spending Trends Staffing and Methodology Levels Sourcing TrendsCIO Executive Board, Information Technology Practice© 2011 The Corporate Executive Board Company. All Rights Reserved. 8
  9. 9. Key Insights 1. Modest Increases in IT Operating Expenditure Forecast for 2012. Two-thirds of CIOs expect to see increased IT operating expenditure in 2012, with a median rise of 2.9%. This is down from 10% realized growth in 2011 Opex, as companies reset spending after 2008 / 2009 freezes. 2. IT Capital Expenditure Flattens After a Year of Significant Investment. Following large increases in capital expenditure from 2010 to 2011, CIOs are expecting to maintain capex spending at near current levels as they have addressed the backlog of projects left from the recession. 3. Information Management projects Outweigh Process Automation. IT project budgets will be flat in 2012, but the budget mix is switching to smaller information management projects rather than process automation projects, 4. Despite Continued Volatility, IT Staffing Allocation Remains Constant. Despite continued economic pressure and increased sourcing interest, the allocation of staff across IT is predicted to remain surprisingly stable.CIO Executive Board, Information Technology Practice© 2011 The Corporate Executive Board Company. All Rights Reserved. 9
  10. 10. Capex Flattens After a Year of Increased Following a large increase in Investment capital expenditure from 2010 to 2011, CIOs are expecting to maintain capex spending at near current levels, with an expected growth rate of 0.6% for 2012.• 2011 IT capital investments increased as organizations addressed the backlog of projects left over from the recession.• Organizations in the U.S. expect larger increases in capex spending for 2012, whilst European organizations are anticipating a sizable reduction in spending driven by continuing economic uncertainty.• More than one-third of respondents expect large increases in capital expenditure for 2012, where recovery in spend did not happen during 2012. CIO Executive Board, Information Technology Practice © 2011 The Corporate Executive Board Company. All Rights Reserved. 10
  11. 11. Modest Opex Growth After a Year of Increased The 2.9% median expected in Spending IT operating expenditure for 2012 is a fraction of the 10% Median Change in IT Operating Expenditure From the Previous Year realized growth in 2011.• The 2012 rise in operating expenditure is driven in part by the cost of supporting the new functionality created during the 2011 IT capital expenditure spike.• European organizations plan to hold operating budgets flat in 2012 following large increases in operating expenditure in 2011, driven primarily by centralization activities.• Organizations expecting a higher than median increase in IT operating expenditure for 2012 are Percentage of Organizations Changing IT Operating Expenditure from the Previous those whose products/services have Year a high information content, as well as innovation-focused organizations. CIO Executive Board, Information Technology Practice © 2011 The Corporate Executive Board Company. All Rights Reserved. 11
  12. 12. Changes in IT Operating Spend by Industry2012 IT operating expenditureis expected to grow at 2.9% atthe median, though thismasks underlying deviation Median Change in IT Operating Expenditure From the Previous Year by Industryacross industries.CIO Executive Board, Information Technology Practice© 2011 The Corporate Executive Board Company. All Rights Reserved. 12
  13. 13. 2012 Corporate IT Spending Outlook Research IT Spending Spending Staffing and Methodology Levels Trends Sourcing TrendsCIO Executive Board, Information Technology Practice© 2011 The Corporate Executive Board Company. All Rights Reserved. 13
  14. 14. The Focus on Information Over Process IT organizations spend morein customer interface,business intelligence, and Breakdown of the IT Project Budget by Enablement Typescollaboration projects than 2011 - 2012they do on processautomation.CIO Executive Board, Information Technology Practice© 2011 The Corporate Executive Board Company. All Rights Reserved. 14
  15. 15. Increased Investments in Mobile Application Investments in mobile Development application development are expected to expand in 2012 to over 4% of total IT Percentage of Total IT Expenditure Allocated to Mobile Application Development expenditure, on average. 2010 - 2012• Organizations are expecting the increase in 2012 spend on mobile applications to be driven by:1. Converting currently existing applications to mobile versions2. Preparing for mobile application development through foundational efforts such as investment in new hardware, training, SOA services, mobile development frameworks etc. KEY FINDINGS | IT EXPENDITURE | CAPEX & PROJECT BUDGET | OPEX | OUTSOURCING & OFFSHORING | STAFFING & ORG STRUCTURE | APPENDIX CIO Executive Board, Information Technology Practice © 2011 The Corporate Executive Board Company. All Rights Reserved. 15
  16. 16. Spending on ‘the Cloud’ is Increasing On average, roughly 6% of IT operating expenditure is Percentage of IT Operating Expenditure Allocated to Cloud Sourcing allocated to cloud sourcing. 2010 - 2012• Infrastructure-as-a-Service (IaaS) includes fundamental computing resources like processing, storage, and networks, where the consumer does not manage the underlying cloud infrastructure but has control over the deployed applications and the operating systems, e.g. Amazon EC2.• Platform-as-a-Service (PaaS) includes consumer-created or acquired applications using programming languages and tools furnished by a provider, where the consumer does not manage the underlying cloud infrastructure but has control over the deployed applications, e.g. Microsoft Azure.• Software-as-a-Service (SaaS) includes applications accessible through a web browser where the consumer does not manage the underlying cloud infrastructure or even individual application capabilities, e.g. Salesforce.com. CIO Executive Board, Information Technology Practice © 2011 The Corporate Executive Board Company. All Rights Reserved. 16
  17. 17. 2012 Corporate IT Spending Outlook Research IT Spending Staffing and Spending Trends Methodology Levels Sourcing TrendsCIO Executive Board, Information Technology Practice© 2011 The Corporate Executive Board Company. All Rights Reserved. 17
  18. 18. IT Service Models Continue to Develop… In 2011, 41% of IT organizations report that Expected Prevalence of IT Service Models they currently have end-to- 2010 - 2013 end IT services.• End-to-end IT services are defined as services that are delivered across IT’s functional towers (e.g., applications, infrastructure). These services unite applications and infrastructure across IT silos.• As service models change, CIOs expect this to drive increases in ability to outsource more individual service components, and to need to increase spending on tooling and measurement for service delivery. Note: Bars may not sum exactly to 100% due to rounding. CIO Executive Board, Information Technology Practice © 2011 The Corporate Executive Board Company. All Rights Reserved. 18
  19. 19. …But is not Increasing Short-Term SourcingCIOs expect significant Decisionsincreases in outsourcingover the next 3-5 years, Percentage of Organizations Mean Percentage of Infrastructurebut are not expecting to Outsourcing Infrastructure at Spending Outsourcedincrease sourcing deals Various Spend Thresholdsin the short-term.CIO Executive Board, Information Technology Practice© 2011 The Corporate Executive Board Company. All Rights Reserved. 19
  20. 20. INFORMATION TECHNOLOGY PRACTICE CIO EXECUTIVE BOARD – CONTACT DETAILSCIO Executive Boardwww.cio.executiveboard.com European Research Director:Washington, D.C.Telephone: +1-571-303-3000 Alexander StilleFax: +1-571-303-3100 stillea@executiveboard.comChicagoTelephone: +1-312-730-9000Fax: +1-312-730-9100San FranciscoTelephone: +1-415-239-5825 European Sales Director:Fax: +1-415-239-5826London Tim KelsoTelephone: +44-(0)20-7632-6000Fax: +44-(0)20-7632-6001 tkelso@executiveboard.comNew DelhiTelephone: +91-124-479-6000Fax: +91-124-479-6001SydneyTelephone: +61-2-8216-0831Fax: +61-2-8216-0701 www.cio.executiveboard.com CIO Executive Board, Information Technology Practice © 2011 The Corporate Executive Board Company. All Rights Reserved.
  21. 21. CORPORATE EXECUTIVE BOARD WWW.EXECUTIVEBOARD.COM

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