IT Spending Up, Priorities Differ

IT budgets are on the rise and predominant technological implementations include hardware and security solutions, according to a 2004 spending study from ITtoolbox. The survey of nearly 300 IT professionals examined businesses’ IT needs and budget allocations, finding that many are driven to spending to remain competitive.

More than one-quarter of the total group of respondents indicated that their company’s annual IT purchasing budget was less than $100,000, with small, medium and large-sized businesses each allocating accordingly.

Annual IT Purchasing Budget
  Small Medium Large
Under $100k 51.80% 16.50% 5.10% 25.60%
$100k to $999k 14.50% 40.50% 15.20% 21.80%
$1m to $9.9m 8.20% 19.00% 27.30% 17.30%
Over $10m NA 2.50% 38.40% 14.20%
Not sure 24.50% 21.50% 14.10% 20.40%
Small = less than 100 employees; medium = 100 to 999 employees; large = more than 1,000 employees
Source: ITtoolbox

Largely determined by the CEO of the organization, more than half of the respondents measured budget increases of 1 to more than 10 percent in 2004, while only 45 percent of participants in the 2003 survey cited increases over 2002.

A greater number of Asian organizations expected increases of more than 10 percent than the European and North American companies — 27.50 percent compared to 20.30 percent and 22.30 percent, respectively. Most (35.90 percent) European organizations expected increases under 10 percent, with nearly 30 percent not seeing any changes to their budget.

“Results for the 2004 ITtoolbox IT Spending Survey agree with other recent industry data that indicate IT budgets are finally waking up from a multi-year hibernation. Fifty-three percent of the survey participants indicate a spending increase over the prior year, while only 12 percent indicate a decrease in spending,” commented George Krautzel, ITtoolbox co-founder and president.

While the bulk of overall recent and current technology implementations include replacing desktop PCs, other hardware upgrades, database software, and networking technologies, security solutions and wireless applications lead the “to do” list for the coming year. Different implementations took precedence depending on company size and location.

Priority of Technological Implementations
  Recent/Current Future
Small Web development/services Wireless applications
Medium Networking technologies Security solutions
Large Replacement of desktop PCs ERP [define] software
Asia Networking technologies Security solutions
Europe Replacement of desktop PCs Replacement of desktop PCs
North America Hardware upgrades Security solutions
Source: ITtoolbox

Small, medium and large companies, as well as those in North America, all strategized to make IT purchases that would increase their competitiveness in the market, while Asian companies gave equal precedence to upgrading their infrastructure, and European organizations hoped to cut costs.

“Most telling is that the top strategic reason indicated by respondents for their IT purchasing decisions was ‘competitive advantage.’ When IT departments are spending to gain or maintain competitive advantage, they are doing so to better enable business strategy and invest in growth. IT vendors should welcome this data,” said Krautzel.

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