IT attention going to upgrades, not overhauls

Budget shortfalls have forced many firms to delay upgrades

IT budgets are being focused on maintaining old systems, rather than implementing new ones, according to a new report from Forrester.

The analyst firm found that companies in North America and Europe are spending roughly half of their IT budgets on maintaining and updating older systems at the expense of new kit.

Forrester said that budget shortfalls from the sagging economy had forced many companies to hold off on upgrade projects in 2009, leaving many IT departments with a backlog of work this year.

"Despite all the hype around new technologies that hit the market in the past few years, firms are devoting most of their IT spending to already-installed technologies," said Holger Kisker, a Forrester senior analyst.

"As long as businesses are prioritising cost cutting and efficiency improvements, tech vendors must provide clearer business justifications for their offerings, and demonstrate the functional fit with business requirements that their solutions provide."

Among the most common projects are upgrades to finance and accounting software, cited by 41 per cent of large companies and 21 per cent of SMEs. Also noted was work on customer relationship management tools and specialised " industry specific" software.

Analysts also noted that, while software-as-a-service has grown over the past year, companies still hesitate to adopt web services for critical tasks. The report found that web services that replace traditional IT infrastructure are experiencing slower growth than services that perform operations not deemed mission critical.

The Forrester report echoes similar analyst assessments which have pointed to lingering security and stability fears over cloud computing services.