January 29, 2013 12:01 am

Asian groups set the pace in IT investment

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European companies are investing less than their Asian rivals in important new technology such as mobile devices and the cloud, according to research commissioned by AT&T, the US telecoms group.

Companies in the Asia-Pacific region are spending a much greater proportion of their IT budgets on the latest technologies and expect to increase those investments more quickly, according to research published on Tuesday by Insead. The business school found that more investment in emerging information technologies can greatly increase competitiveness and help companies outperform their peers.

Insead identified three crucial areas: mobile internet-connected devices such as smartphones, laptops and tablets; cloud services, where data is stored and worked on remotely; and collaboration tools, which include conferencing and instant messaging. These compare with more traditional IT spending such as on hardware and enterprise software.

Asian companies plan to increase the amount spent on mobile from 12 per cent of their IT budgets in 2010 to 30 per cent by 2015, while cloud investments will grow from 17 per cent to 31 per cent and collaboration tools will increase from 18 per cent to 26 per cent, according to researchers. Investments in these areas can overlap – for example an investment could be classified as “mobile” and “cloud”.

European companies are planning to spend more on new technologies, but they will not keep up with Asian budgets. Mobile will account for 20 per cent of overall IT budgets in 2015, compared with 12 per cent in 2010, while investment in cloud-based services will increase from 12 per cent to 23 per cent, and in collaboration tools from 16 per cent to 17 per cent.

The report said investment in these increasingly important areas was not enough in isolation, however. Some investors in technology had shown no improvement in competitiveness. Other business resources were critical in making technology investments succeed, such as having a digital platform where technology, business process and data components are standardised, shared and integrated.

Although European companies were spending less on new technology, past investments and better digital infrastructure could be used to make fresh spending count.

In terms of expected investment in mobile and cloud services, North American companies are lagging behind both European and Asia-Pacific rivals, although the report expected to them to catch up with European groups in the next two years.

The findings are based on responses from senior executives from 225 multinational companies active across Europe, Asia-Pacific and North America.

Asian companies “must be careful not to rush too quickly to adopt new technologies” without a platform, the report warned. Policy makers could help businesses by creating a regulatory environment that helped the storage and flow of data.

Andrew Edison, regional vice-president for Europe, Middle East and Africa at AT&T, said: “Increasing productivity is one of the primary challenges facing European companies today. New technologies like cloud offer great opportunities to do this, which some high performers are demonstrating.

“However, simply adopting the newest technologies is not the answer, and is in fact a great risk. The secret is a mature platform and avoiding the creation of ‘infrastructure spaghetti’ in the rush to adopt the latest tools.”

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