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Healthcare to buck IT spending downturn

New IT spending trends analysis has found budgets will continue to shrink, except in the healthcare industry.

By Miya Knights, 18 Sep 2008 at 14:16

A new report published today predicts healthcare will be the only industry vertical to escape the IT spending downturn.

The ‘Technology Trends: Analysing Global Enterprise IT Budgets 2008’ report from Datamonitor has also found evidence that the trend towards shrinking IT budgets was in fact evident before the global credit crunch took hold.

Daniel Okubo, Datamonitor technology analyst and author of the report said: “For the past couple of years enterprises have been cutting back IT budget increases as they adopt a more cautious viewpoint of the global economy.”

The research analysed the responses of more than 8,000 IT decision makers surveyed between 2006 and 2008 and found the number of enterprises planning to significantly increase their IT budget had fallen for the fourth consecutive year.

The only vertical sector set to buck this trend is healthcare, with 57 per cent of respondents saying they planned to expand IT expenditure. The report said this was due to increasing demand for health services from the aging “baby boom” generation in Western Europe, the US and Japan and the need for more cost-efficient care delivery processes.

However, the report suggested deeper concerns over IT spending outside of healthcare than those raised just by recent economic turmoil.

Over half of respondents were expecting their IT budgets to remain at the same level in 2009 as it was for 2008. Over one third (37 per cent) expected to see their IT budget increase in 2009 and 13 per cent were anticipating IT budget cuts, which taken in isolation, would suggest IT budgets were faring better than expected in the current economic climate.

But, when the results from previous Datamonitor surveys conducted in 2006 and 2007 were analysed, a noticeable downward trend in the proportion of enterprises planning to significantly increase their IT budget (by 6 per cent or more) emerged: from 20 per cent in 2006 to under 10 per cent in 2009. In Datamonitor’s view, this suggested growth in the amount spent by enterprises on IT was on the decline, indicating a slow down in IT market growth overall.

“These results should be a warning sign for vendors,” Okubo added. “An analysis of forward looking statements in enterprises’ annual reports reveals deep concerns over future prospects as domestic demand in developed economies falls.”