​Want money for that new project? Then it's time to go on a moose hunt

New project spending is on the rise, but tech chiefs will still have to hunt down the funding.


How global tech spending in 2015 breaks down.

Image: Forrester Research

CIOs looking to find ways to fund new projects might want to go on a moose hunt. No, really.

Tech budgets are composed of two elements: spending on new projects and spending to maintain and operate the tech organisation, systems, and equipment - for which analyst Forrester is using the deliciously whimsical acronym 'Moose'.

Forrester said that this business-as-usual tech spend accounts for between two-thirds and three-quarters of the typical CIO's budget. And in recent years the growth in new project spending has been modest, as nervous CIOs held back on launching major new tech projects. However, the analysts said new project spending will rise in many countries in 2015 and 2016 - especially if CIOs can hunt down that moose.

During the tech market slump of 2013 and 2014, new projects were the first area where firms scaled down or deferred spending to cope with weak revenue growth, reduced cash flow, and tight lending markets, said Forrester in its new report The Global Tech Market Outlook For 2015-2016.

In many cases, that scale-back took the form of firms opting for software-as-a-service (SaaS) applications thanks to their low upfront costs. New project tech purchases fell by 2.3 percent in 2013 and rose by 1.5 percent in 2014, but that's still less than the growth in overall tech purchases.

But improving economies are creating room for higher growth in tech purchases in the US and other countries, which translates into new project spending slated to rise by 5.8 percent in 2015 and 7.2 percent in 2016, faster than spending on maintaining and operating existing systems (although one area where 'Moose' spending will rise is capital investments to replace hardware after delays in these upgrades in 2013 and 2014).

New projects also mean new spending patterns: around 90 percent of the spending on new project purchases will go for software and implementation services. Only a small amount will go on hardware, thanks to server virtualization and SaaS.

In contrast to new project spending, tech maintenance and operations spending is fairly evenly divided between computer equipment, communications equipment, software, consulting services, and outsourcing services.

CIOs can use this shift to cut better deals with supplies. According to the analysts, slow growth in hardware, mature enterprise applications, and outsourcing mean "vendors will go to great lengths to close sales, so use this to your advantage". Forrester said CIOs should take advantage of opportunities to retire old software and systems and renegotiate existing outsourcing agreements.

One side benefit here will be that tech leaders can use the savings to fund new projects. At the same time, funds will need to be found to pay for ongoing Saas contracts - which might turn out to be more expensive than on-premise software and actually add to the maintain and operate budget in the long term.