Gartner says IT budgets in Asia Pacific and Japan (APJ) will rise by a miniscule 0.9 percent. What is impressive though is that 35 percent of IT spending will be funded directly by business units, according to the annual global survey of CIOs by Gartner's Executive Programs.
 
“APJ businesses expect IT to support growth and are increasing IT budgets accordingly,” said Gartner vice president Andy Rowsell-Jones. “Although not a large increase, this growth in IT budget at least allows APJ IT leaders to prepare the ground to capture the digital opportunities appearing in 2014.”
 
More notable, given the growth of the conventional IT budget, is the proportion of IT spending funded from outside of IT. In contrast to the global average, where 73 percent of IT funding is estimated to be funneled through the conventional IT budget, only 65 percent is estimated in APJ, leaving 35 percent of IT spend to be funded by marketing and other buying centers of IT services, such as sales, operations and R&D.
 
“This high level of unconventional funding from outside IT, while aiding growth, may contribute to integration issues in the short term and governance in the long term,” said Rowsell-Jones.
 
The top technology spending priorities of APJ CIOs for 2014 reveal two complementary goals: exploiting new technologies and trends, and renovating the core of IT.
 
Table 1: Technology Spending Focus: APJ vs. Global

Source: Gartner, March 2014
 
Nearly one-third of APJ businesses are enthusiastic adopters of public cloud, indicating significant investments in the drive for greater agility. This places them ahead of their global peers: 31 percent of APJ CIOs say they have invested significantly in cloud compared with 25 percent globally.
 
Only 56 percent of APJ respondents are using software as a service (SaaS), whereas this figure is much higher globally (72 percent). This implies that the majority of cloud services are being consumed by the IT function rather than business units directly.
 
“It’s unsurprising that investment in mobile app development and device management ranks second, given the rapid growth in adoption of mobile-data-enabled smartphones and tablets, the increased popularity of BYOD, and the explosion in the number of devices capable of participating in the Internet of Things,” said Rowsell-Jones. “This is followed by business analytics in third place, as enterprises in this region seek to better understand and manage the drivers of business performance.”
 
The second area of significant investment for APJ IT leaders is renovating the core of IT — in other words, ensuring that the infrastructure, as well as the main IT applications and services, such as data center, ERP and networks, are fit for purpose to ensure that the core is digital-ready.
 
IT leaders across APJ have long embraced strategic sourcing, mixing in-house with sourcing from offshore captive units, contractors and fully fledged outsourcers. The survey data bears this out, showing APJ to be slightly above of the global average when it comes to mixed or outsourced arrangements.
 
Gartner says this is only the beginning and that APJ IT leaders intend to embrace strategic sourcing even more wholeheartedly, with 77 percent expecting to change their sourcing arrangements in the next three years.
 
To address the age-old tension between needing to provide slow and steady IT (for critical systems), while responding "at the speed of digital" (for innovative, differentiating opportunities), digital-savvy IT leaders are managing their IT organizations in two modes: traditional and nonlinear.
 
APJ is slightly in front with the adoption of this model, with 48 percent of respondents saying they operate some form of bimodal IT, in contrast with the global average of 45 percent.