IT spending defies economic gravity

Despite current economic uncertainty, technology is unlikely to become a casualty of spending squeezes with expenditure instead predicted to remain buoyant, according to a National Computing Centre (NCC) study published today.

More than half (58 per cent) of respondents predict above inflation increases in IT spend in the next year, with the average growth rate expected to be 4.9 per cent, compared to January's CPI figure of 2.2 per cent.

Sector-wise, the construction and health industries are coming out on top and anticipating the most growth, found Benchmark of IT Spending 2008 survey, which studied 120 organisations with a combined turnover of over £32 billion and IT spend of more than £750 million.

"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," said Stefan Foster, the NCC's managing director.

Virtualisation, voice over IP (VoIP) and storage area networks (SANs) will all have money spent on them in the coming 12 months and ITIL-driven business process management (BPM) applications will continue to generate interest from investors.

Operational spend generally accounts for more than a third (39 per cent) of budgets, according to the companies surveyed, followed by staff costs at 35 per cent. The average level of tech staff by 1,000 employees currently stands at 29.4, which is an increase of 1.3 on the previous NCC study. Capital/development eats up one fifth of the overall IT spend.

In terms of who's getting plump as a result of increased investment, offshore outsourcing is looking increasingly portly, with more than a quarter (26 per cent) of organisations currently offshoring and 31 per cent planning on doing so in a couple of years.

Redmond giant Microsoft is also likely to benefit, according to the NCC. While Windows XP dominates the server marketplace with almost three-quarter (71 per cent) of respondents using it, in two years time Vista will be used in 75 per cent of the companies who took part in the research.

"Users have played cautious with Vista, letting a small band of early adopters iron out any problems," said Foster. "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."

In terms of where those companies will roll out Vista, mobile devices are likely to be a key target, with more than half (57 per cent) of respondents saying they expect an increase in the number of laptops deployed in their business in the next two years. Similarly, a rise in the volume of PDAs is also expected - to the tune of 134 per cent as the collective number of desktops is expected to shrink by two per cent.

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