SMEs and public sector pull IT out of the slump

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SMEs and public sector pull IT out of the slump

Computer Weekly reporters
Growth at highest level for 18 months, says Kew Associates/CW report.

Spending by IT departments has accelerated at its fastest rate for 18 months, the latest Computer Weekly/Kew Associates survey has revealed.

Spending by end-users grew by 5.2% in the last quarter of 2003, up from 3.9% in the third quarter, providing further evidence that IT is pulling out of the worst downturn for a decade.

Small and medium-sized companies and the public sector are driving the growth, outstripping larger companies and the private sector, the survey revealed.

Companies employing less than 500 staff spent 7.5% more on IT in the last quarter of 2003, compared to the 3.9% increase generated by larger companies.

Kris Wicka, director at Kew Associates, said, "SMEs are still playing catch-up with larger firms when it come to IT expenditure, so the difference in spending may continue in the future."

The public sector continued to generate healthy expenditure growth, with a 6.6% increase, although this was not as high as the 7.2% and 8% increases in the previous two quarters.

Although the private sector still lagged behind the public sector overall on expenditure, the services sector did enjoy a spurt in growth of 5.5% in the last quarter, the survey found. This was compared to the 3.4% achieved in the previous quarter.

The production industries, buoyed by the CBI's belief that the manufacturing downturn was over, built on their previous IT growth by spending 3.3% more in the final quarter.

Wicka said, "No one really knows what will happen to the economy, and the close correlation between big increases in GDP and similar increases in IT expenditure is still not there."

Wicka said there was optimism in IT in the US, but that this has not resulted in the expected increase in sales, leading to firms such as Cisco modifying their forecasts.

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