In its first ever pan-Asian survey, Forrester Research, Inc. (Nasdaq: FORR) finds that IT budgets are up in Asia Pacific, with 36 percent of firms increasing their spending on technology in 2005 compared with 17 percent that are decreasing spending. A majority of the firms also have a positive outlook about the future — 53 percent expect the next 12 months to be good for their industry. This survey joins Forrester’s regular assessment of IT decision-makers’ opinions of technology adoption, budgets, and governance across North America and Europe. The healthy budgets and favorable industry outlooks in Asia Pacific were well-aligned with their global counterparts.
“We found that economic maturity and growth rates were relative indicators of the varying responses to IT adoption and spending across Asia. IT spending increases are pronounced in India and ASEAN, while South Korea, which is struggling to regain economic growth, is the only country to see net budget decreases,” said John C. McCarthy, vice president, Forrester Research. “In general IT spending priorities are healthy — overall, 21 percent of spending is going toward new IT initiatives. However, Japan and Australia and New Zealand stand out, having committed the largest percentage of IT budget to ongoing maintenance.”
Forrester surveyed 700 firms in China, Japan, Australia and New Zealand, India, South Korea, Hong Kong, Taiwan, and the Association of Southeast Asian Nations (ASEAN) about the state of their spending and industries in 2005 and beyond. To benchmark these organizations in context, the survey consisted of the same questions Forrester asked North American and European technology decision-makers in June and November 2004. Overall, Forrester found that:
- Improving workforce productivity was rated the highest average priority for Asia Pacific IT shops, just as it is in North American shops.
- The exact same percentage of firms in Asia Pacific and North America — 59 percent — has centralized IT departments.
- Overall spending on IT services is up for 30 percent of firms — nearly matching North American levels — with the largest firms clearly leading the way.
- Only 20 percent of respondents indicated that they are already deploying supply chain solutions — less than half that of North American firms. Taiwan has the highest percentage of firms with a supply chain solution deployed.
Basic priorities, such as security, consolidating infrastructure, systems management, and application integration, top the list for IT spending in the next 12 months. In general, developing economies like India and China were more likely to view these basic priorities as critical. The established economies of Australia and New Zealand and Japan lead in software adoption, with Web services software the most widely adopted. Open source software and Linux received strong interest, with 41 percent of firms considering Linux.
Breakout By Country
When looking at the countries individually, Forrester found that while overall budgets are increasing, IT staffing is increasing more modestly, with the majority of firms in most countries holding IT staff flat. Specific country data follows:
- Australia and New Zealand. Integration and consolidation lead to modest budget increases, with 68 percent citing data center or server consolidation as a priority. Thirty-eight percent of respondents have seen IT budget increases, placing them squarely between North America and Europe.
- China. Basic infrastructure and eCommerce are the focus of investment, with 47 percent of firms increasing spending on Internet and eCommerce initiatives. Twenty-five percent of Chinese firms haves seen modest budget increases, which is consistent with their global counterparts.
- India. Firms in India are setting the investment pace, with 34 percent of respondents allocating budgets for new IT initiatives. Unlike their peers, not one of the Indian firms indicated that it planned to decrease IT staff. Security and application integration top the list of priorities, with 80 and 78 percent citing as priorities respectively.
- Japan. Firms in Japan are cautiously increasing their IT budgets over 2004, are slightly decreasing staffing, and are spending very little on new IT initiatives. Infrastructure spending will focus heavily on networking equipment and security, with 47 percent of firms increasing spending in these categories.
- South Korea. Twenty-four percent of respondents are decreasing their IT spending, due in part to low economic growth. Infrastructure spending in South Korea will focus most heavily on security in the next 12 months, with 46 percent of firms increasing spending.
The research mentioned in this release, “The State Of Asia Pacific Technology Adoption And Governance,” and specific midyear spending outlooks for Australia and New Zealand, China, India, Japan, and South Korea are available to WholeView 2™ clients and can be found at www.forrester.com.