'Tis the Season to Finalize IT Budgets

Blog /Tis the Season to Finalize IT Budgets
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As 2018 draws nearer, a growing number of companies are getting serious about digital transformation. Increasingly demanding, tech-savvy customers, rapidly evolving digital technologies, and the blistering pace of business disruption has made digital transformation top-of-mind among business leaders across industries around the globe.

Yet complexity and confusion still reign. There are so many technologies involved, so many moving parts, so many competitive threats. The digital waters have been sufficiently tested with Line of Business (LOB) one-offs, so much so that now what first seemed a quick-win has become just another layer of complexity. Digital transformation must go enterprise-wide and be strategically guided, but this is proving easier said than done.

With 2017 drawing to a close, budgets for 2018 are being finalized, but are businesses truly ready for the challenges ahead? Or are we in for more digital tactics chasing a transformation strategy?

Pundits predict uptick in IT spending for 2018

Every business is unique. Each must prepare an annual tech budget that aligns with specific business requirements and growth goals. Nonetheless, it is helpful to know what other businesses are doing around the globe and, especially, within your industry.

In this spirit, we’ve pulled together a quick roundup of analyst predictions for global tech spending in 2018:

  • According to Gartner, Worldwide IT spending is projected to total $3.7 trillion in 2018, an increase of 4.3 percent from 2017 estimated spending of $3.5 trillion.
  • International Data Corporation (IDC) estimates that global IT spending will grow to nearly $2.65 trillion in 2020, representing a CAGR of 3.3% for the 2015-2020 forecast period.
  • Forrester projects that global purchases of technology software, hardware, and services by businesses and governments will grow by 3.4% in 2017, and by 4% in 2018, reaching more than $3 trillion.

Digital business hits inflection point in 2018

Customer centricity is the guiding principle of digital transformation. Cloud, mobile, big-data analytics, IoT, AI, ML and social are the myriad, integrated and rapidly evolving technologies that enable digital transformation. Fear of ‘death-by-disruption’ is digital transformation’s key driver.

What began on the edges as “shadow IT” projects led by LOB heads now impacts core business processes and has been embraced by the C-suite as a strategic business imperative.

The consensus among leading analyst firms is that digital transformation will reach an inflection point in 2018.

According to a survey from Gartner (as reported in TechRepublic), some 47% of the 388 CEOs surveyed said they face pressure from their board of directors to make progress in digital business.

Some 20% of CEOs are taking a "digital first" approach to transformation, which may include efforts such as creating a new business process, according to the Gartner survey. And 22% of CEOs are taking a "digital to the core" stance—a more dramatic form of transformation where the product, service, and business model change with new digital capabilities, and the technology that supports those becomes a core competency.

John-David Lovelock, research vice president at Gartner, underscores the growing importance of digital business: "The IT buying landscape is changing: Digital business transformation is an effort to create connected, platforms and new industry revenue streams,” says Lovelock. “Organizations that are not creating new digital business models or new ways to engage constituents or customers are falling behind. Those vendors that do not move more quickly than their clients will be left behind." (As reported in Futuriom).

As reported in TechRepublic, IDC is equally bullish on digital business in 2018. By the end of 2019, spending on digital transformation will reach $1.7 trillion worldwide—up 42% from 2017, according to a new report from IDC.

Digital transformation technology spending continues to grow across all geographies and industries, the report noted. However, 59% of companies remain at an early stage of digital transformation maturity, or what IDC calls a "digital impasse."

The report included a number of other technology predictions for the coming years:

  • By the end of 2019, spending on digital transformation will reach $1.7 trillion worldwide.
  • By the end of 2018, at least 40% of organizations will have a fully-staffed digital leadership team.
  • By 2020, 60% of all enterprises will have fully articulated an organization-wide digital platform strategy, and will be in the process of implementing it.

Businesses are struggling to realize the digital dream

A recent report from The Economist Intelligence Unit (EIU), sponsored by SAP, showed survey results designed to gauge satisfaction with digital initiatives among SMEs ($250M - $1B ) versus larger enterprises ($1B+). Even though the majority of all companies surveyed ranked their digital initiatives as a relatively high or the highest strategic priority (SMEs 67%/LEs 80%), only a relatively small percentage ranked their digital initiative as being highly effective (SMEs 21%/ LEs 29%).

Two-thirds of Global 2000 CEOs will center their business strategies on digital transformation by the end of 2017, according to IDC. But few business executives today have the leadership mindset or skills necessary for these strategies to succeed, according to the Leaders 2020 study conducted recently by SAP, Oxford Economics, and McChrystal Group. The study found that only 16% of executives are ready to lead their companies through this transformation.

Help in reaping digital fruit

As we enter 2018, businesses across industries understand that the piecemeal edge innovations of past years won't pass muster and that the core business processes that drive operations must be completely re-imagined -- from the consumer to the core -- if they are to remain relevant and viable in today's digital economy.

As a growing number of companies transition from planning to implementation and/or from one-off projects to an enterprise-wide strategy, the need grows for a consulting partner with the experience, resources and approach to ensure success.

At NTT DATA, we anticipate a strong demand in 2018 (and beyond) for consulting partners with the experience, skills and guidance capabilities needed to close the gaps between tactics and strategy and expectations and results when it comes to digital initiatives.

Contact NTT DATA today to learn more about how our focus on Enterprise-Grade Digital Business can help your organization survive and thrive in the digital age.

Post Date: 12/14/2017

NTT DATA Services Frank Parrish Frank Parrish

About the author

Frank Parrish is a vice president in the Enterprise Applications Services (EAS) Business Unit at NTT DATA Services, a Global IT Innovator delivering technology-enabled digital business services and solutions to clients around the world. His responsibilities include management of the EAS Business Consulting and Sales Engineering teams across the Enterprise Resource Planning (ERP) and Customer Relationship Management/Human Capital Management (CRM/HCM) portfolio, driving consistency and client focused leading innovation for our clients.

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