Hardware spend to rise 8.7%

Despite evidence of continuing growth in IT spend, research has revealed a startling lack of forward planning among UK companies....

Despite evidence of continuing growth in IT spend, research has revealed a startling lack of forward planning among UK companies. Karl Cushing explains the significance of the latest batch of figures

After slowing down in 2001, expenditure on IT hardware in the UK is set to rise by 8.7% to £16bn in 2002, increasing to 11% in 2003, according to the latest Kew Associates and Computer Weekly report on IT expenditure. However, new research commissioned by Siemens Financial Services (SFS) suggests that although technology is still the highest priority for UK companies many may be jeopardising their prospects by adopting short-sighted acquisition strategies.

The UK Technology Acquisition Study, which, between September and October 2001, polled finance directors from 100 companies in the UK with a turnover of more than £50m, paints a rather depressing picture of conservative thinking in IT spend hindering companies' development and their ability to take advantage of business opportunities.

Two-thirds of the respondents (62%) cited keeping up with changes in IT as a key influencer in determining their IT expenditure, ostensibly admitting that their technology acquisition strategies are reactive, not forward thinking. Compounding this problem is the reluctance to use alternative types of financing.

Only one-third (32%) of the companies in the survey use leasing to finance IT, with 68% of companies financing their IT spend with cash only. SFS concludes that this reactionary thinking is hampering innovation and the adoption of smarter technology acquisition strategies among UK companies.

A high percentage of respondents also admitted they did not have a fixed spending timetable for office software, main business systems hardware or core business software (44%, 36% and 50% respectively). Only in desktops was there evidence of wider forethought, with 53% running to a three-year spending plan and only 18% admitting to having no fixed timetable in place.

Another sign of the times is that 23% said that IT investments and upgrades were down. The least affected area is desktop PCs, especially in companies with a turnover of more than £500m, where 90.9% said that upgrades and renewals were the same or increasing.

On a more positive note, the fact that the large majority of respondents cited safeguarding the security of systems and information (88% and 85% respectively) as key influencers in IT spend suggests that the majority of UK companies are waking up to this particular threat.

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