Survey Links IT Investment to Corporate SuccessBy Steve Wexler | Posted 2009-11-24 Email Print
Building on the McKinsey and Co. findings that 'strategic' companies emerge stronger from recessions, market researcher Ronin has linked the role of IT in this type of economy and predicts a bumper 2010 for the IT industry.
In the third of four related studies, Ronin Corp., a market research firm with offices in Princeton N.J. and London, has linked the role of IT in separating the winners from the losers as this recession draws to a close.
Looking to build on the McKinsey findings that 'strategic' companies emerge stronger from recessions while 'short-term' companies emerge with weaker competitive positions, Ronin set out to identify the role that IT played in this. And while the fourth study, scheduled for January, will be required to provide more detailed spending data, the results clearly indicate that the strategic companies are investing more in IT, have more advanced technology in place and regard IT as more strategically important than their short-term counterparts, says Harry Bunn, president and CEO of Ronin.
Of greater importance to the IT industry is that there could be a huge opportunity to sell a lot of products and services next year, he adds. The overwhelming majority of respondents stated their IT infrastructures -- 84 percent -- were either mainstream or behind mainstream.
"There is a lot of potential out there. A lot of catch-up companies will have to make big investments in IT. That may mean that vendors may have a pretty bumper year in 2010."
While the numbers have changed over the course of the year, Bunn is pretty confident that the latest results showing that overall spending on IT will fall by 5.1 percent over 2008 levels are accurate. That's up from the second study three months ago which indicated that spending would drop 8.1 percent.
It's been a nasty environment out there, and IT, while suffering slightly less, has not been immune, says Bunn. As part of the study, respondents were asked to characterize IT as being strategic, a service, or a cost to be controlled. In 2008 only 20 percent viewed it as a cost, but that number increased to 36 percent in June and softened slightly to 33 percent in October. The strategic camp ended 2008 at 32 percent, dropped to 28 percent in June and shot up to 34 percent this month.
The third study was the first to try to link strategy and IT spending, says Bunn. Under half the respondents -- 46 percent -- were in the strategic category (43 percent in the U.S.). "A lot of the other countries are shifting more to strategic mode but that hasn't happened as much in the U.S."
When it comes to IT spending plans, 42 percent of the strategic companies plan to increase their spending, compared to just 18 percent in the cost-cutter category. More than half of the cost-cutters -- 56 percent -- plan to decrease their IT spending, compared to just 32 percent on the strategic side.
In terms of current IT infrastructure, the cost-cutters are either behind or well-behind the mainstream, while 42 percent of the strategic companies regard their infrastructures as mainstream and would prefer it to be better than that. "These would seem to be a very good bet for the vendors," says Bunn.
The study also ranked buying criteria for potential vendors. Long-term strategic vision and best-in-class solutions topped the list, with lowest cost coming in fifth. That's further evidence that customers are looking at IT as a strategic asset, he says.
Ronin conducted this third phase of the ongoing program studying the impact that the current worldwide recession had on companies' IT initiatives in early October 2009. Over 4,900 surveys were completed over the three waves by IT decision-makers both in IT departments and in the lines of business (e.g. finance, marketing) across 12 countries - U.S., Canada, Mexico, Brazil, Germany, U.K., France, Italy, Spain, China, Japan, and Australia. Respondents were members of Ronin global IT Decision-Maker Panel.