Two recent economic analyses forecast significantly increased IT budgets by businesses in general this year, both domestically and internationally. Areas affected include those applicable to the banking industry, including cloud computing, data handling and analysis, information security, enterprise mobility, and more.

With a focus on new growth opportunities and efficiencies, 29% of U.S. private companies surveyed for PricewaterhouseCoopers LLC’s Private Company Trendsetter Barometer plan to increase their IT budget over the next year.

In 2010, U.S. private companies allocated approximately 5.6% of their budgets to IT. This investment is expected to rise to an average of 6.6% over the next 12 months, a year-to-year increase of nearly 19%.

Meanwhile, Gartner Inc. forecasts worldwide IT spending to increase 7.1% this year (see below.)

Nearly half (46%) of companies surveyed by PwC identified important and/or sizeable areas or functions in need of IT upgrade or improvement, and 18% of those businesses report that they’ll require additional budget expenditures to make the necessary changes. Overall, these companies are a faster growing group, forecasting an average revenue growth rate of 11.5% over the next year versus 9.1% for all other private companies.

More international marketers cite critical IT upgrade concerns (54% versus 39%) and say they need additional spending to cover the required upgrades (26% versus 10%) than their domestic-only peers.

“Technology plays a critical role in driving global growth and competitiveness for private companies, particularly in fast-growing and emerging markets like China, India, and Brazil,” says Ken Esch, a partner in PwC’s Private Company Services practice. “As private companies increasingly view these markets as places to sell rather than just as sites for low-cost sourcing and manufacturing, they'll need to have digital channels in place to deliver products and services efficiently and effectively.”

These companies’ IT investments will be focused on two main areas over the next 12 months: innovation (36%) and maintenance (64%). Significantly, companies in the innovation segment allocate a larger portion of their budgets to IT than those primarily in the maintenance segment - 9.53% versus 5.01%.

Key areas of planned IT investment for private companies over the next one to three years are information security (70%), next-generation data management and analysis (50%), enterprise mobility via tablets and handheld devices (48%), social media/networking (46%), and cloud computing (40%). Companies in the innovation segment are significantly more likely to invest in next-generation data management and analysis, social media/networking, virtualization, cloud computing, and context-aware computing than those in the maintenance segment.

“As the role of technology grows, information security is increasingly critical for private companies,” says Esch. “Risks such as cyber attacks, intellectual property misuse, fraud, and system outages can be managed and reduced with strategic investment in IT security."

Data analytics is another top area of planned IT spend. Notes Esch: "Key to achieving growth is having insight into customer needs, trends, and opportunities. Private companies that can leverage IT to this end will be able to make better-informed decisions about new product and service offerings, helping them broaden their customer base.”

The leading business objective of IT investments for private companies is to make their business processes more efficient and effective (90%). Other top objectives include better managing enterprise data (75%), optimizing business information/analytics (73%), making the business more agile (58%), and attracting new customers (58%).

A significant percentage (61%) of the executives surveyed expect to confront barriers in realizing a positive business impact from IT investment over the next year. Lack of appropriate IT resources (34%) and cumbersome IT infrastructure (28%) were the two leading barriers, especially among firms in need of critical IT upgrades or improvement.

“Despite the near-term barriers to achieving business goals through IT, we’re encouraging our clients to view their IT spend and return on investment over the long term,” says Esch. "Many IT areas, such as cloud computing and offshore IT support, actually require fewer internal resources than legacy IT infrastructure, while often delivering more.”

PwC's Private Company Trendsetter Barometer tracks the business issues and standard industry practices of leading privately held US businesses. It incorporates the views of 233 CEOs/CFOs: 126 from companies in the product sector and 107 in the service sector, averaging $265.4 million in enterprise revenue/sales, and including large, $300 million-plus private companies.

http://www.pwc.com/us/en/press-releases/2011/US-Private-Companies-increase-IT-budgets.jhtml

Looked at in a broader context, Gartner Inc. said worldwide IT spending is on a pace to grow 7.1% in 2011, with public cloud services growing four times faster than overall spending.

Gartner’s analysts revised overall IT forecast spending growth in U.S. dollar terms, up from their first quarter update, when they projected 5.6% growth for 2011.

"It is a bit surprising that we have not seen a more significant impact on our global IT spending forecast as a result of the Japan earthquake and tsunami, but despite widespread concerns about disruptions to the supply of critical components in the initial aftermath of the natural disaster, there has not been a dramatic impact on overall IT spending," said Richard Gordon, research vice president at Gartner. "For 2011 as a whole, we expect Japan IT spending to be down in local currency, but we expect a positive growth trend to emerge in the second half of the year and continue into 2012."

Global IT services is forecast to reach $846 billion in 2011, a 6.6% increase from 2010. The computing and hardware segment is poised for the strongest growth with spending forecast to grow 11.7% in 2011.

The migration to public cloud services is currently one of the hottest topics in IT, and Gartner's latest forecast found that spending in this area is projected to grow four times faster than spending on overall IT. Worldwide public cloud services spending is forecast to total $89 billion in 2011, up from $74 billion in 2010. The market is forecast to reach $177 billion by 2015.

However, to put this growth in context, Gartner analysts said public cloud services spending was only about 2% of global IT spending in 2010, and by 2015 the level of spending on public cloud services will be less than 5% of the total spent on IT overall.

"Nevertheless, the emergence and adoption of cloud is an important trend, and in some markets, it's already a significant factor," Gordon said. "For example, at about $10 billion, software as a service (SaaS) already accounts for 10% of enterprise applications software spending, and by 2015 this share is expected to increase to close to 15% and to exceed $20 billion in annual spending."

http://www.gartner.com/it/page.jsp?id=1735214