Report claims that tech vendors must work harder as companies seeking savings and efficiency invest more of their budget on in-house IT projects

Technology companies will have to work harder for their customers' cash as businesses spend a greater proportion of their budgets on in-house IT projects.

A report from market analysis group Datamonitor suggests that, although technology budgets are on the rise, companies believe they get better value and faster results by investing in-house.

Aphrodite Brinsmead, analyst at Datamonitor and author of the report, said businesses currently spend around a third of their technology budget on internal IT initiatives.

She explained that the IT department is often the first choice for addressing technology needs, as companies chase cost-effectiveness and efficiency.

She said IT decision-makers believe tasks can be carried out more quickly in-house as staff are already on the spot and have better knowledge of the business.

Brinsmead added that vendors need to work hard for business and target areas where economies and IT budgets are strong.

The research found financial services and utilities companies are most likely to increase their IT budgets, with more than half of those questioned across the sectors saying their budgets will increase in 2008.

But Datamonitor predicts the proportion of expenditure on hardware is likely to decrease. This is due to increasingly complex IT infrastructures and the fact vendors are promoting their services, according to analysts.

Around the world, Italian companies are the most likely to approach technology vendors for help before their own IT department, while Benelux and Australian companies are most likely to stay in-house.

The Understanding IT budget trends H1 2007 report quizzed 500 IT decision makers in Australia, the UK and the US.

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