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Investing in Information Technology

I attended a forecasting presentation by Tiffani Bova, “Reading the Tea Leaves” at the Microsoft Worldwide Partner Conference yesterday. Ms. Bova spoke about the IT industry from the Microsoft Partner perspective and the presentation was excellent.

Ms. Bova stated that IT spending is about 64% on maintaining current IT systems and the other 36% is split between growing capability and implementing new technology. These ratios have been about the same for the past 10 years and this surprised me a little as I would have thought that through advancements in technology maintaining existing systems would have been reduced.

Not surprising technology spending is off from 2007 and 2008 and will take a few years to return to the peak levels. The cloud is expected to grow to about 20% of IT spending over the next few years so this is a high growth emerging market. Although traditional IT spending will grow slower, there will be 4% to 6% annual growth in most IT segments.

Ms. Bova pointed out that companies have been in the save money mode for several years now and are now trying to find ways to transform their business and take advantage of technology. Focusing entirely on ROI and saving money may not be the best strategy now. Clearly ROI is important but, “What technology can a business implement to drive success?”, is a more significant question today.