How business decisions are driving technology spending

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The decisions behind IT budgets are no longer made in isolation as businesses learn how important it is to align IT investments with business strategy.

For a long time the technology investments businesses made were mainly in areas that would help keep back-office systems running. But today, businesses are increasingly relying on technology to deliver the company’s overall business strategy.

Examples of Australian businesses that have bumped up their technology investments over the years include major banks, such as Westpac, which recently announced it was boosting its annual investment spending toAU$1.3 billion to accelerate the digitisation of the business. Meanwhile, the Commonwealth of Australia racked up AU$628 million in total information technology service expenses during the first half of the 2015 financial year.

Similarly, during the federal government’s 2015 budget, it allocated AU$250 million for the Australian Bureau Statistics to undergo an IT overhaul to eliminate its legacy woes; while another AU$254 million was handed out to the Digital Transformation Office in the Department of Communications.

This is evidence of businesses shifting the way technology funding is allocated and the role technology now plays in any organisation.

Gartner research director Derry Finkeldey said technology has become more ubiquitous in organisations, and therefore the understanding of how technology can drive business strategies is increasingly considered as part of driving growth for the business.

“I think [technology] is less arcane to people outside of IT. Our consumer experience is driving a deeper understanding of technology in general, and so it is more accessible for business people to understand and be involved,” she said.

She said that budgets for technology investments haven’t increased; the money where businesses are choosing to spend their money has shifted.

“We’re seeing a lot of that spending being driven by the line of business. For example, analytics is really about making business decisions, and so these are business initiatives rather than run the business type IT decisions,” she said.

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