Lines of Business Now Funding More than 40% of Enterprise IT Spending

The influence of lines of business (LoBs) over enterprise IT spending in the Middle East and Africa (MEA) continues to grow, according to the latest insights from International Data Corporation (IDC). The firm's recently published 'Worldwide Semiannual IT Spending Guide: Line of Business' shows that 40.5% of the region's total enterprise IT spending for 2015 stemmed from business functions rather than the IT department itself. And this share is only going to grow over the coming years, with IDC expecting LoBs to account for 43.7% of enterprise IT spending in 2020.

IT spending by business functions in the region totaled $16.75 billion in 2015 and IDC expects this figure to reach $23.22 billion in 2020, representing a compound annual growth rate (CAGR) of 6.7%. This compares to a CAGR of 5.1% for MEA enterprise IT spending as a whole, with IDC forecasting that a total of $53.16 billion will be spent in 2020. IDC expects LoB influence over corporate IT spending to continue growing steadily beyond 2020 as digital transformation takes hold and business functions increasingly look to invest in technology solutions that align directly with their own priorities.

"Of course, IT departments still account for the lion's share of corporate IT spending in the region," says Megha Kumar, senior research manager for software at IDC Middle East and Africa. "But this share is expected to fall from 59.5% in 2015 to 56.3% in 2020, a decline that reflects the growing trend for department-level initiatives to be funded directly by the respective business functions themselves while IT departments focus solely on funding core operational IT projects. We also expect to see a growing number of IT initiatives being funded jointly by LoBs and IT."

In MEA, verticals such as transportation, retail, healthcare, and media lead the way in terms of business functions supporting funding for IT projects or engaging in joint funding initiatives. A lot of these projects are focused around LoBs fulfilling omni-channel ambitions to better service their customers and streamline internal business processes. In sectors such as process manufacturing, telecommunications, utilities, and construction, some projects are being funded by the business, but majority of IT project funding is still sourced from IT or jointly funded. 

"It is becoming increasingly apparent that there is a shift in the region when it comes to funding enterprise IT initiatives," says Kumar. "The IT department remains a core part of the business, but has to prioritize budgets for core operational IT solutions to ensure business continuity and performance. For IT initiatives that are business driven, we are seeing a shift towards business functions funding projects themselves or jointly funding them with IT. The extent of this trend varies considerably across countries and sectors, but the prevalence of LoBs funding IT initiatives is undoubtedly increasing."

The 'Worldwide Semiannual IT Spending Guide: Line of Business' is IDC's flagship all-in-one data product, capturing IT spending across 20+ technology categories and 12 functional areas. It provides a granular view of IT market spending from country, industry, functional area, and technology perspectives. The comprehensive database is delivered via pivot table format or IDC's custom query tool, allowing the user to easily extract meaningful information about various technology markets and industries by viewing data trends, relationships, and making data comparisons across functional areas.