Organizations across Europe, the Middle East, and Africa (EMEA) agree on the need to refocus IT budgets toward IT innovation in order to improve business performance, productivity, and profitability, according to a new study conducted by SAP. The study looked into IT spending priorities of nearly 500 senior IT decision-makers in eight countries across EMEA, and concluded that a key issue was the division of IT spend among three areas: operations, maintenance, and innovation.
One-third of companies said that their current IT strategy is too focused on "simply keeping the lights on" in the day-to-day running of existing IT systems. Overall, an alarming 60 percent of companies said that this IT strategy has held them back from investing in innovation. Respondents indicated that they face a wide range of issues that currently prevent them from investing in IT innovation.
The most commonly cited reason was uncertainty about the economy, with 48 percent of respondents believing this was a barrier. In addition, 39 percent stated that too much money is spent on operations at the moment, therefore leaving a deficit in the budget that could otherwise be directed toward IT innovation. The detrimental effect was also viewed as impacting competitiveness, with 38 percent of respondents stating the current spend priorities harmed their competitive position.
Lack of spend on IT innovation is having a negative business impact, with 44 percent of respondents saying it has directly resulted in lack of productivity. Forty-three percent also claim to have lost potential cost savings because of the spend deficit. Additionally, over half of the companies surveyed believe that they would get greater business value if more was spent on IT innovation.
When asked how this lack of IT innovation investment would impact their company over the next three years, one-third of respondents claimed that this would result in lower revenue growth than their business needed, and 38 percent also said it would result in a failure to meet regulation and compliance demands.
"Our research has confirmed that companies continue to spend more of their IT budgets on operations than on IT innovation," said Chris McClain, senior vice president of EMEA and India, SAP Premier Customer Network. "SAP is working with many customers around the world to help them lower their TCO to apply resources toward the innovation that will give them the advantages to grow their businesses and achieve their strategic goals."
The survey was comprised of 487 interviews with senior IT decision-makers including CIOs, IT budget decision-makers, and IT budget holders, conducted across eight countries (UK, Russia, Germany, UAE, France, Saudi, Italy, and Qatar). SAP is the world's leading provider of business software, offering applications and services that enable companies of all sizes and in more than 25 industries to become best-run businesses.