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IT Budgets Focuses On ERP Upgrades, Services, Security

Chief information officers will increase IT investment in 2006 using funds to add modules to ERP systems, replace servers bought in the late 1990s and invest in software to address risk in security and regulatory compliance. These conclusions are based on a McKinsey & Co. survey of 77 U.S. senior IT executives. Authors Kishore Kanakamedala, Vasantha Krishnakanthan and David Mark predict that IT budgets will grow by 3% on an accrual basis across industries.

Forty seven percent of the respondents list sector-specific enhancements to basic ERP platforms as a top priority. These enhancements are to improve the productivity of operating processes and to address competitive issues in their industries.

Business intelligence tools will see an influx in funds as companies look to improve methods of analyzing customer data and market trends.

Additionally companies will invest in finance and accounting modules to comply with governance regulations such as Sarbanes-Oxley.

More than half of the survey respondents will be replacing servers bought during the late 1990s. CIOs also want to replace their circuit-based telecom infrastructure with Voice over Internet Protocol (VoIP) telephony to combine voice and data networks and simultaneously reduce costs.

Needing to comply with regulations that require the protection and maintenance of both financial and operational data for longer periods of time, companies will invest in disaster recovery applications.

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