A survey of the IT budgets of 700 Asia Pacific businesses and government agencies, including 125 from Australia and NZ, in June and July 2005, indicates that spending is on the rise but IT staffing remains stagnant.

Research firm Forrester surveyed a high proportion (31%) of the senior most IT decision-maker at their company or government agency and found that IT budgets are on the rise. Australasian firms have seen healthy budget increases over 2004 that are closely aligned with their North American and European counterparts. 38% of respondents have seen increases, while only 17% decreased budgets. This places the region squarely between North America and Europe, where the net budget increases were 27% and 10% respectively. For Asia Pacific as a whole, 36% of respondents' budgets increased and 17% decreased, leaving the Australasian region as an average APAC respondent.

While IT spending is clearly on the rise, however, IT staffs are increasing only modestly. As with IT budgets, Australasian firms find themselves between bullish North American firms and bearish European firms when it comes to IT staff hiring. The vast majority of firms — 70% — are holding IT staff flat; however, 19% are spending some of their budget increase on staffing, while only 9% of firms are downsizing. Compared with their APAC counterparts, Australasian IT departments appear to be far more mature, as they seriously lag behind the hiring going on in India, greater China, and Association of Southeast Asian (ASEAN) countries.

A worrying finding was that new IT investment, a key measure of the value of IT spending, is particularly low among Australasian firms. On average, 82% of spending is contributing to ongoing operations and maintenance, leaving only 18% for new IT initiatives that typically drive innovation and process refinement. This level is well behind North American and European firms, and leads only Japan in APAC. While this is reflective of low levels of IT spending, it also suggests that too much capital is tied into maintaining mature systems and processes. The new IT investments that will be funded vary widely from new process tools to RFID technology. A common thread, however, is investment that deals with the restructuring and integration of IT.

Australian and New Zealand organisations expect to make investments in consolidation, integration, and security during the next 12 months. Application development and licensing, networking equipment, and server hardware also top their wish lists. For the most part, however, spending reflects an attempt to rationalize and integrate previous purchases.

Infrastructure consolidation tops list of priorities. When we asked organizations what their major themes for the next 12 months would be, the clear winner was data center or server consolidation. 68% of Australasian respondents cited it as a priority, with 30% giving it the designation of critical priority. For comparison, the next highest critical priority was replacing proprietary or legacy systems, with 21% citing it as such. Application integration and significant security upgrades were the next major themes.

Integration is the leading software initiative. During the next 12 months, 45% of respondents will be increasing spending on applications and labor to integrate systems and data. Application software licenses and development spending increases are close behind at 42% of respondents. ERP package software implementation will see the lowest spending increase, with 27% of firms increasing and 15% of firms decreasing spend.

Networking equipment and server hardware are at the focus of interest. Infrastructure spending will focus most heavily on networking equipment and server hardware over the next 12 months, with 51% of firms increasing spending for each of these categories. This far outpaces North American spend, where only 37% of firms will increase spending in each of these categories. The most notable difference, however, is the percentage of firms who will greatly increase spending. For networking equipment, for example, 22% of Australasian firms will spend much more, compared to only 6% of North American firms.