Tech investment to continue in economic decline

20 May 2008

Despite global financial crisis and a slowdown in the economy, 42pc of Irish companies are still planning further investment in technology, a new survey reveals.

According to the second quarterly survey from KPMG and the Sunday Times, this has fallen slightly from a planned 57pc further investment at the beginning of 2008.

This demonstrates the confidence of Irish businesses in an area that is usually considered optional investment rather than necessary, the surveyers say.

“The slight fall in investment reflects the current economic situation but the very fact that Irish companies are planning to continue investing in technology is encouraging,” said Paul Toner, partner in KPMG’s Business Advisory Services.

“Technology is traditionally considered an area of discretionary spending and Irish businesses would be reluctant to invest in this area if they were facing a period of prolonged uncertainty.”

The survey was conducted across a random sample of 300 companies in Ireland, ranging from small and medium businesses to large companies employing 100-plus people.

When asked what area of business was planned for further investment in 2008, 42pc of respondents cited technology, down 15pc from the beginning of the year.

Toner cited a tough start to 2008 and uncertainty over what are the right technology investments to make as contributory factors to the slight decrease but continued investment in technology.

“The second half of 2007 was a very healthy period for Irish businesses and presented opportunities for further growth and expansion. What the figures from this survey highlight is the fact that the beginning of the year was a more difficult time for companies but investment is continuing to be part of their overall business plans.”

Toner also suggested that the challenge for businesses considering investment in technology projects is identifying the right technology investment at the right time for the business.

“Without stating the obvious, a technology investment in an unsuitable or ill-timed project can have a significant negative effect on a company.

“Companies must ensure they make the right decision at the appropriate management level and invest wisely in the first instance to avoid problematic technology projects that can result in costly delays or unwanted distractions for management, especially in the uncertain economic climate

“In the current market environment, our IT advisory practice has seen an increase in the demand for our services as clients seek the benefit of independent advice from experienced professionals to guide them through a critical project.”

According to the survey, some 75pc of respondents still regard the outlook for 2008 as being ‘neutral’ or ‘positive’. The survey also highlights that Irish companies are beginning to embrace the environment as a business opportunity and not just a cost.

One third of companies now see the environment as a potential source of business, particularly among larger companies.

By John Kennedy