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Mixed message on IT spending. (IT News).

Respondents to NCC's IT Spending Survey 2002 gave mixed messages on the changes in IT spending levels over the past year. The median IT spending level was [pounds sterling]2,925 per end-user, marginally lower than the [pounds sterling]3,022 per end-user reported in 2001. At the same time, respondents indicated that their IT spending levels had actually increased since the previous year. 53% indicated that IT spending had increased, while 37% said that it bad decreased and the remainder reported no change. The survey also generated an estimate of IT spending as a proportion of turnover/revenue. At 1.8%, this is very close to the estimates generated by NCC IT Spending surveys in the mid 1990s. It suggests that, in broad terms at least, IT spending levels are very similar to those reported ten years ago.

Rapid growth for Health and Distribution sectors

Predictions for IT spending growth for next year are cautiously optimistic. once again 53% are predicting an increase in total IT spending next year, while 29% predict a decrease and the remainder expect no change. The overall results of their expected spending levels is an aggregate 2.4% increase in total IT spend between 2002 and 2003.

Health and Distribution sectors are predicting the most rapid growth in IT spending next year. In the Distribution sector 45% of organisations are predicting a 10% growth in IT spending, while in the Health sector 43% of them are predicting a 10% increase. The IT sector is predicting a further period of slow growth in IT spending.

This aggregate increase is the result of a predicted 3.6% increase in operational spending, but only a 0.6% predicted increase in capital and development spending. Organisations are expecting to spend more money on operational items, such as IT staff, software, hardware, training and data communications. However, major new developments with capital spending implications will not grow as quickly.

Local Government and Health sectors investing in networking

The breakdown of IT spending is 62.1% on operational spending, 34.4% on capital and development spending and 3.5% by end-users or other sources. Since 2000 there has been a slight increase in the proportion of total IT spend being assigned to capital and development spending.

Overall central and development spending is made.up of 46% on central systems and applications, 33% on desktop systems and applications, and 21% on network/infrastructure. Both Health and Local Government sectors reportedd a significantly higher emphasis on network/infrastructure with Local Government reporting 34% and Health reporting 36%.

Comment from the National Computing Centre

NCC expects IT user organisations to remain a little cautious and we expect this to be reflected in a modest increase in IT spending for 2003.

The high emphasis on investment in network and infrastructure applications by the Local Government sector is a clear indication of their commitment to electronic service delivery by 2005. The rapid growth in IT spending predicted by the Health sector for 2003 is welcome news as they have traditionally been the least likely to invest in IT.
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Title Annotation:NCC's IT Spending Survey 2002
Publication:Software World
Geographic Code:4EUUK
Date:Jan 1, 2003
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