days of carefree IT spending has given way to an era
of regulated IT budgets, ROI focused investments and
increased efficiencies. IT Heads are looking at new
ways to do more with less
about a year and half back, most CIOs had clear orders:
Buy computer gear by the truckloads in order to kick
off new business initiatives. Every industry, right
from automobiles to retailing was keen on adopting new
technologies in order to stay ahead of competition.
We had businesses adopting solutions like ERP, CRM,
etc that need investment in high-end IT infrastructure.
The idea was to streamline business processes, cut cost
and reach out to customers better. Most enterprises
achieved this with varying degrees of success.
When doing this it hardly mattered whether CIOs were
squeezing every last bit out of the infrastructure they
were deploying. In many cases technology was adopted
for technology's sake, without taking into consideration
the actual benefits the core business would derive.
Not anymore. The past year has been a turbulent one
for most businesses across all industry segments. Investment
in IT infrastructure, which was considered crucial for
business expansion over the last two decades, has been
After years of heavy IT spending, businesses worldwide
are cutting down on their IT spends, in some cases slashing
their budgets by over 20 percent. This poses a serious
challenge to CIOs/CTOs who are forced to keep a check
on their IT spending while ensuring their company maintains
the competitive edge.
But the days of carefree IT spending have given way
to an era of regulated budgets, ROI-focused investment
and increased efficiencies. While focusing their investment
on areas that would help them save costs from day one,
CIOs are also trying to squeeze more out of existing
equipment before placing orders for new equipment. CIOs
are trying to maintain this fine balance in order to
achieve their two-fold objective: to accommodate their
IT needs in the budget allocated to them while ensuring
their company doesn't lose its technology edge.
Strategies 2002", the Network Magazine ORG-MARG
first annual CIO/CTO survey, highlights the issues mentioned
The survey results highlight some of the interesting
trends in IT procurement decision making. Among the
companies surveyed 56 percent said that the IT Head
acts as the main decision maker regarding any IT procurement/implementation
decision. Every four out of five technology requirements
are defined by IT Heads. Contrary to the popular belief
among some vendors that the CFO also plays a crucial
part since he is the man behind budget allocation, only
5 percent of the respondents said that the CFO plays
a key role in IT procurement decision making. Various
levels of management, which includes Business Managers
and CEOs, also take part in IT procurement decision
making, but the key influencer/decision maker is the
Seeking business value
Of the companies surveyed 49 percent said the key decision
parameter for any IT procurement decision is the "Business
Value" it would add to one's core business. An
example would be an auto manufacturer implementing ERP
or SCM in order to increase process efficiencies. ROI
is considered as the second most important parameter
with 34 percent of the respondents vouching for ROI.
Price, often considered to be the main parameter by
most vendors, is a distant third at 20 percent.
Focus Vs Budget allocation
The top interest area this year for IT Heads is Enterprise
Software (41 percent IT Heads have expressed this interest).
This is closely followed by Bandwidth/Connectivity (39
percent) and Security (37 percent). The average amounts
allocated however give a totally different picture.
This year the highest average amounts allocated are
for Converged Networks (Rs 368 Lakh), Bandwidth/Connectivity
(Rs 346 Lakh), Enterprise Hardware (Rs 288 Lakh). The
average amount allocated for IT this year (Rs 554 Lakh)
shows a negligible increase as compared to last year
(Rs 549 Lakh).
decisions regarding IT procurement/implementation
originate from IT Heads
Decisions taken by IT Heads on any new
requirement is based on the business value gained
by implementing that particular technology
There is a marginal increase in the amount
of funds allocated for IT in the current year
as against the last year
Top 3 focus areas this year: Enterprise
Software, Bandwidth/Connectivity, and Security
Highest average amount allocated for: Converged
Networks (Rs 368 Lakh), Bandwidth/Connectivity
(Rs 346 Lakh), Enterprise Hardware
(Rs 288 Lakh)
(in Rs lakh): 549 (01) and 554 (02)
Year (in Rs Lakh)
Year (in Rs Lakh)
Like every survey, this one too involved over
four months of extensive research. Here's how
we did it:
The first step involved in any research is designing
the questionnaire. For this we sat with the
ORG-MARG team to decide on the various parameters
based on which the questionnaire would be structured.
This was a tough task, given the fact that we
had to play around with over 100 variables and
still keep the questionnaire short so that a
CIO would be able to answer all the queries
within 30-40 minutes.
After designing the rough questionnaire, the
next step was to conduct three pilot interviews
with CIOs. The idea was to cross check our parameters
and assumptions before we went ahead with the
The next step was to identify the IT Heads in
various companies. For this survey we finalized
on a sample of 200 IT Heads (CIOs, CTOs, VP-IT
etc) across four cities-Mumbai, Delhi, Bangalore
and Chennai. This was on the assumption that
most IT Heads are based in this cities. We were
also very careful that the sample represents
all the industry segments, either sector-wise
or turnover- wise. Industry-wise we divided
companies into six main categories: Manufacturing,
FMCG, Banking & Finance, Services, IT and
Telecom. (Later for the analysis these were
merged into three main categories: Manufacturing,
Banking & Service, IT/Telecom.
After this the ORG-MARG field team, armed with
a structured questionnaire and pre-defined parameters
conducted interviews with IT decision makers.
This entire exercise stretched over a period
of two months.
The last but most important step was analyzing
the research data and drawing valid conclusions.
The objectives of "Infrastructure Strategies
2002" are three-fold:
To understand the IT budget allocation
To analyze the main technology verticals
CIOs/CTOs are focused on
To evaluate the benefits enterprises seek
from a particular technology
the next few pages we provide you the detailed features
on each of the different categories we have covered
in this survey.