Feature

Asia Pacific Companies Bullish on IT Investments for 2011

3 minute read
J. Angelo Racoma avatar

In the wake of global economic recovery, businesses worldwide are gearing towards increased investment in IT for 2011. The Asia Pacific region is seen as more aggressive in terms of upgrading enterprise systems. The question here lies with the kinds of IT activities that organizations are expected to undertake.

According to a recent survey done by Gartner (news, site) with 1,500 business leaders in 40 countries, 39% are increasing their IT budgets in 2011. However, the Asia Pacific region shows a bigger proportion of organizations that are allocating additional money for upgrading their IT systems, at 44%. This involves an increase in businesses’ IT spending by as much as 72%, which will be on projects that involve cloud computing, improvement of business processes, upgrading CRM systems, data centers, outsourcing and compliance.

Derry Finkeldey, Gartner’s principal research analyst, says that the recession is over as far as the IT sector is concerned. “Software spending in the Asia Pacific reflects the upbeat outlook of most enterprises and a strong focus in many industries on improving customer service in an increasingly competitive market place,” he adds.

Asia-Pacific Economies: Quick to Recover

Businesses in the region are said to be more bullish about their IT investments partly because the region was not as badly hit by the 2009 recession that plagued most western economies, particularly the United States. The Asia-Pacific region has actually been expected to outpace the rest of the world in terms of economic growth through 2010.

Asia Pacific commodities markets are likewise seen to be growing with the optimistic profit outlooks. Hence, organizations in the region have more leeway in terms of increasing their budgets. However, this might not necessarily mean that businesses in the region are ready to try out bleeding-edge technologies.

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Cloud Computing: Not a Big Part of IT Spending Increase

Despite the optimism in terms of IT expenditure in the region, the majority of organizations are not likely to adopt cloud services. This might partly be due to concerns on security, reliability and accessibility earlier raised by business and government leaders. Among organizations surveyed, 63% says they have not included such services in their budgets for 2011. Most businesses say they are appropriating the increase in funds for activities like new software licenses (35%), IT personnel (30%), data centers (24%), end-user equipment (20%) and telecommunication costs (14%). Services take the smallest slice of the budget pie at 13%.

Meanwhile, 34% of Asia-Pacific businesses surveyed are apportioning part of their budget for cloud computing. It is notable that these are organizations that plan to have a high growth in business expenditure in the upcoming year. Gartner’s Finkeldey notes that most are still learning about cloud services, and their expenditures on data centers, virtualization and other activities are likely to be precursors to shifting to the cloud. “We are seeing that the money is now shifting from traditional IT budget categories to new types of spending,” he says.

IT spending often leads to gains in efficiency and productivity. With Asian economies on the rise, a proportionate increase in IT investments and expenditure is expected. However, not many organizations are eager to adopt new technologies, perhaps due to the need to go through stepping-stones, like improvements in IT infrastructure (like broadband access, data centers and the like). It will likely be a slow, but sure, move toward a wider adoption of bleeding-edge technologies and services.