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Large firms' growth plans drive rise in IT spending

Organisations are beginning to increase spending on IT, the latest Computer Weekly/Kew Associates survey has revealed.

Organisations are beginning to increase spending on IT, the latest Computer Weekly/Kew Associates survey has revealed.

IT spending growth rose for the first time in three months in the third quarter of 2005 to 5.2%, and it could reach 8% by next year if Bank of England economic forecasts hold true. The chancellor Gordon Brown will announce new growth forecasts in his pre-budget report next week.

After months of tightening their belts, organisations are beginning to invest strategically in IT systems to improve the profitability of their businesses.

Education and training, disaster recovery, web services and outsourcing head the list of spending priorities, benchmarking analysis by Kew Associates  revealed.

"Business is continuing to grow and IT is growing with it. Having gone from boom to bust with Y2K and the dotcom crash, growth is much more measured. It is very much a case of businesses needing to invest in technology to support their growth," said Ben Booth, IT director of research firm Mori and chairman of the BCS Elite IT directors group.

Large organisations are leading the upturn, with the rate of spending growth up from 3.5% to 4.7% between the second and third quarters - the fastest rate of expansion over the past 12 months.

In the public sector, IT spending growth rose from 3.9% to 5.45%. If the national programme for IT in the NHS was factored in, the growth rate would be 6%.

The production sector also saw a rise in IT spending growth, up from 2.8% to 5.5% between the second and third quarters.

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