UK IT spending will outstrip economy says NCC

Spending on IT will grow faster than the rest of the economy, in spite of fears of recession, according to the National Computing Centre.


Spending on IT will grow faster than the rest of the economy, in spite of fears of recession, according to the National Computing Centre.

The NCC asked 120 UK companies about their spending plans and found 58 percent of the respondents predicted an above-inflation increase in IT expenditure over the year. The companies had an average turnover of £267m and an average annual IT budget of £6.25m.

The NCC survey contrasts to research by analyst firm IDC which painted a grimmer picture for IT spending, pointing out that server expenditure this year could fall. And Gartner warned companies to start cutting IT costs now, before a recession hits.

According to the The Benchmark of IT Spending 2008 survey, the median growth rate in IT expenditure reported is 4.9 percent, against January's CPI figure of 2.2 percent, with the construction and health sectors predicting the highest growth.

The vendor most likely to benefit from this is Microsoft, according to respondents, as many businesses plan to move to the Vista operating system. Although Windows XP currently dominates the marketplace with 71 percent of respondents using it, in two years time Microsoft Vista will be used in 75 percent of responding organisations, the survey estimates.

“Users have played cautious with Vista, letting a small band of early adopters iron out any problems,” said Stefan Foster, Managing Director of NCC. “At the same time many organisations are now approaching their desktop refresh cycle and want to exploit enhancements in Vista and Microsoft's Windows Server 2008.”

The number of laptops in use is also set to increase by 57 percent in the next two years, whilst over the same period respondents expect the number of PDAs to grow by 134 percent. In contrast, the aggregate number of desktops is expected to decline by 2 percent.

Companies are also dedicating a sizeable part of their budget to virtualisation and storage area networks, according to survey responses. In communications, voice over IP remains the most popular investment, whilst the growing adoption of ITIL is generating noticeable interest in business process management applications.

Typically operational spending averaged 39 percent of total IT expenditure while staff costs formed 35 percent of companies’ budgets. Development and capital spending was 20 percent.

26 percent of respondents were spending on outsourcing processes and activities offshore, and 31 percent plan to do so in 2 years’ time. But in-house IT is also on the increase, with the median level of IT staffing set at 29.4 IT staff per 1,000 end users, an increase of 1.3 compared to the previous survey. But there is significant variance between sectors.

Foster said: “We hear talk of a recession, but the Benchmark results indicate that IT purchasers are remaining confident about future economic conditions; they are making sure that their businesses have the right technology to deliver growth over the coming years, but they are not over optimistic.”

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