UMT360 Blog

Blog Posts from the Leader in Enterprise Portfolio Management

Ushering in 2014 & Your Application Spend

Written by Mike Gruia on January 6th, 2014 at 8:29 pm

As we ring in 2014, IT spending is on its way up.  Gartner is forecasting a 3.1% increase in worldwide IT spending this year taking it to an estimated $3.8 trillion.  Also on the rise, the amount of software budgets dedicated to applications.  In a Gartner enterprise IT spending study last year, respondents indicated the largest portion of their software budgets, 36%, is focused on enterprise application software; 33% of the budget goes to infrastructure software; and 31% to vertical industry-specific applications. The increase in funds dedicated to enterprise application software is necessary largely due to organizations working with outdated application systems.  In most mature markets, those systems are more than a decade old and replacement of the antiquated technology is critical to remaining competitive.

This is a good time to review your own 2014 application spend asking yourself whether your budget as currently written will be able to help you achieve your business goals and new business needs among the ever changing market conditions.  As well, how will the move to the cloud impact your spending?  Gartner reported last year that only 38% of organizations they surveyed were using cloud services, yet 80% of respondents indicated they would be using cloud services over the next year so certainly the cloud will have a strong impact on spending in 2014.

Here are some recommendations and thoughts we share with our own customers as they step into Q1 – subjects we’ll be discussing more throughout 2014:

  1. Shining a light – Prepare an IT strategic road map and ensure it’s aligned to business strategy.
  2. Time to get started – Develop a APM approach to rationalize or modernize your application portfolio.
  3. Product revolution – Use the more agile product-focused thinking when examining your IT spend.
  4. Tracing spend – Prevent the failure to control the life cycle cost liabilities of your portfolio.
  5. Playing responsible – Assess the ability of existing APM, PPM and Financial Governance mechanisms to effectively support your strategic direction and change.
  6. There is only one portfolio – Integrate APM and PPM decisions to create and sustain competitive advantage.
  7. Where are the benefits? – Business benefits and their tie to business engagement will be increasingly important this year.