IT departments still ‘fixated’ about cost cutting despite higher budgets

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Almost half of IT budget holders don’t put down revenue generation and customer loyalty as chief aims

IT departments across Europe are “still fixated” on containing costs at the expense of working on new value-add activities.

Research commissioned by Claranet surveyed 900 European IT leaders, and found that cost reduction is significantly more likely to be a focus for IT departments in 2016 than it was a year ago.

In spite of budget increases, 46 percent of respondents highlighted cost reduction as a core function today, compared with just over a third (34 percent) in 2015.

auditing software finance deal agreement contractThis focus on costs is likely to come to the detriment of other value-add activities, said MSP Claranet – just 29 percent of IT leaders view enabling revenue generation for the wider business as a core function, and only a quarter (25 percent) believe they should be engaged in increasing customer loyalty.

Michel Robert, Claranet UK managing director, said: “European IT budgets are growing, which would suggest there’s a recognition within businesses of the importance of IT, however time and resources are still not being spent on more forward-thinking projects that can generate more revenue in the long-term.”

He said: “It goes without saying that costs are important, but it’s critical that IT departments can reposition themselves internally as enablers of business agility and innovation, rather than as cost centres.”

The survey results may well be alarming to those allocating IT budgets for wider cloud deployments, as the cloud is supposed to free up IT departments to focus on generating business advantage, not keeping the lights on.

@AntonySavvas