IT decision makers admit they need to refocus IT budgets toward innovation in order to improve business performance.

According to a study conducted by SAP among almost 500 senior IT staff in eight countries across Europe, the Middle East and Africa, a key issue was the division of expenditure among three areas - operations, maintenance and innovation.

A third of companies said that their current IT strategy is too focused on “simply keeping the lights on” in the day-to-day running of existing IT systems.

Overall, 60 percent of companies said that this IT strategy has "held them back" from investing in innovation. Respondents indicated that they face a wide range of issues that currently prevent them from investing in technology.

The most commonly cited reason was uncertainty about the economy, with 48 percent of respondents believing this was a barrier. In addition, 39 percent stated that too much money is spent on operations at the moment, therefore leaving a deficit in the budget that could otherwise be directed towards innovation.

The detrimental effect was also viewed as impacting competitiveness, with 38 percent of respondents stating the current spend priorities harmed their competitive position.

A lack of spend on IT innovation is having a negative business impact, with 44 percent of respondents saying it has directly resulted in a lack of productivity.

In addition, 43 percent also claimed to have lost potential cost savings because of the spend deficit. Also, over half of the companies surveyed believed they would get greater business value if more was spent on IT innovation.

“Our research has confirmed that companies continue to spend more of their IT budgets on operations than on IT innovation,” said Chris McClain, senior vice president of EMEA and India, SAP Premier Customer Network. “SAP is working with customers to help them lower their TCO to apply resources toward the innovation that will give them the advantages to grow their businesses."

The survey comprised of 487 interviews with IT decision makers across the UK, Russia, Germany, UAE, France, Saudi Arabia, Italy and Qatar.

Source: Computer World UK