IT spend accelerates as users get the upper hand
22.11.2004 - CCL News

IT directors press for better value from suppliers as growth rate tops 7%

IT spending in the UK is growing at its fastest rate for three years as businesses take advantage of an improving economy to replace outdated IT infrastructure.

Organisations increased their IT expenditure in the third quarter at a rate of 7.3% a year, the highest level since mid-2001, according to the latest IT expenditure report.

The upturn comes at a time of intense competition among suppliers, leaving IT directors opportunities to drive some tough bargains and get far more for their money than in previous years.

The growth in spending is driven by pressure on organisations to reduce rising operating costs by outsourcing systems and services, and investing in IT systems with a rapid return on investment, according to analyst firm Gartner.

Companies with up to 500 staff are leading the upturn, increasing their IT spend at an annual rate of 8.1%. The rate for larger firms is 6.9% a year. The public sector reported the biggest rise in IT spending, up from 5.1% in Q2 to 8.8% this quarter. The figure excludes the government's multibillion-pound national programme for IT in the health service.

Spending trends
* IT spend is being driven by a desire to cut IT and business costs
* Organisations are investing in outsourcing to reduce costs
* Operating costs have risen as companies extend the life of existing IT equipment
* Desire to become customer-centric is spurring interest in CRM
* Organisations are evaluating business intelligence systems to improve profits
* Compliance legislation is soaking discretionary spend in finance
* Prudent cost management is now a way of life.