Survey reports 11% rise in IT spending

IT budgets are on the rise, according to a Deloitte Touche Tohmatsu survey of 130 New Zealand chief information officers.

IT budgets are on the rise, according to a Deloitte Touche Tohmatsu survey of 130 New Zealand chief information officers. Sixty-one per cent of respondents reported that their budgets increased in 1995 from the previous year, with an average increase of 11%. No change was reported by 19% and 20% had IS spending cuts.

Deregulation of the energy market appears to be spurring activity in the energy sector, with energy, oil and gas organisations topping the budget rise with a 40% increase.

Energy was followed by retail at 31% and distribution at 27%. Only two industry sectors reported budget cuts--education, with a 5% decrease, and financial service organisations (traditionally big IS spenders), which suffered budget slashes of 22%.

The survey also reveals that the government sector budgets a larger proportion of its revenue for IT (31%) than any other sector. This is followed by financial services at 9% and insurance at 3%. Overall, New Zealand organisations spent an average of $3236 per employee on information services but this varies widely from industry to industry. Way out in front was financial services with $21,813 per employee, followed by insurance with $11,568 and energy, oil and gas with $8489. Education came last with $1647.

When it comes to dividing up IS budgets, the consumer products (6%) and manufacturing (5.7%) sectors spend a higher proportion on training than other industries. However, in actual dollar amounts, government, consumer products and distribution sectors spend the most on training their employees, the survey finds.

The report is the result of Deloitte’s second annual survey which contains a plethora of facts on New Zealand CIOs.

The survey highlighted client/server as a major technology development within many organisations. This coincides with planned increases in business process re-engineering (BPR). CIOs stressed that strong project management and a visible and involved executive sponsor are essential for success.

The Internet is generating an extraordinary amount of attention as a medium for business transactions, both internal and external to organisations. However, email and research, the original drivers which engendered the development of the Internet, are still the primary functions for which organisations use the Internet. Until current security issues are addressed and the benefits of using the Internet are more clearly defined, many organisations are hesitant and have assigned high priorities to other projects.

Seventy per cent of all CIOs expect to increase their spending on client/server projects over the next two years.

CIOs predict usage of more advanced client/server architectures will more than double over the next two years, rising from 13% of all applications in 1995 to 29% in 1997.

Only 60% of the CIOs who expected benefits from the use of client/server tools in 1995 say they actually achieved them.

Seventy-eight per cent of CIOs who have completed or nearly completed BPR projects express satisfaction with the results.

On average, organisations launched 4.1 BPR projects in 1995, a similar number to the year before. Almost two-thirds of CIOs expect the number of projects launched to increase again over the next two years.

Women account for 13% of all CIOs, up from 11% last year. CIOs are 42-years-old on average. Twenty-three per cent of CIOs say they reached their position through finance/accounting channels and the largest slices of information services staff are dedicated to application development and application maintenance.

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