Enterprises Shift New Spending to Revenue Initiatives

October 15, 2014
By: Gary Kim

Enterprises are likely to invest three to four times more in technology aimed at growing revenue than technology to lower business costs, predicts Andrew Bartels, Forrester Research (News - Alert) VP and principal analyst.

That represents a change from practices of the past six decades, when most information technology spending was designed to improve efficiency and lower cost.

The new emphasis is on revenue growth, supporting enterprise activities related to winning, serving, and retaining customers, Bartels says.

In addition to higher spending on front-office systems for sales and marketing, organizations will be spending to develop new products, handle and fulfill orders, serve customers and acquire the human and partner resources for doing this effectively.  

Still, what might be called “hygenic” spending (to maintain health) to support efficiency and cost reduction will continue to represent over 70 percent of total enterprise technology spending through 2017.  

Much of that spending will support core systems already put into place, and represents maintenance and operations spending.

Still, spending aimed at growing revenue will increase more than three times as fast as “hygenic” spending to gain efficiencies or support existing programs.

Increased spending on technologies to grow revenues through customer focus will be boosted at 10 percent to 12 percent rates through 2017, while spending on hygenic systems will grow at two percent to four percent rates.

As a proportion of new project spending, purchases to support revenue initiatives will exceed hygenic spending starting in 2014. And more of that new spending will use cloud computing mechanisms. 




Edited by Maurice Nagle