Report shows 'two nations' of IT spend

Paul Mason delves down into the details of last week's Computer Weekly Kew Associates report on UK firms' IT expenditure.

Paul Mason delves down into the details of last week's Computer Weekly Kew Associates report on UK firms' IT expenditure.

IT spending is set to grow 18% this year, but budget breakdowns will vary sharply according to sector.

The finance sector is investing heavily in computer services from third parties, while the cash-strapped education sector still spends 40p in every pound of its IT budget on hardware.

In 2000, spending on hardware is forecast to make up 26.5% of the typical IT budget. Software spend takes an average 14% of IT budgets while computer services accounts for 25.5%. Staff spending accounts for 27%, while telecoms services and the general category of consumable supplies together make up 7%.

Banking and finance is the biggest-spending sector according to the Computer Weekly/Kew Associates IT Expenditure Survey, and is seen as a trendsetter in IT budget management.

Banks and finance institutions with more than 500 employees will spend nearly 32% of their budgets on computer services, mirroring the high level of outsourcing in this sector. The concomitant is a smaller proportion spent on permanent staff, which stands at just over 22% of IT spend for big finance firms.

The survey confirms that small- to medium-sized enterprises (SMEs) are moving into line with large firms in terms of spending growth and patterns of spend.

In the retail, wholesale and catering sector, spending in firms with 500-plus employees closely matches the breakdown for those with 100-499 employees.

For all the Government's emphasis on IT enabling education, the data shows the relative underdevelopment of the budget model, with large amounts still spent on hardware.

For large education organisations, hardware budgets take up more than 42%. Medium-sized education establishments spend nearly 40% on hardware and just 16% on staff.

Data for the metal goods, engineering and vehicle manufacturing sector reflects the takeoff of outsourcing among large firms. Large companies in the sector will spend a huge 34.4% on IT services this year, which appears to be at the expense of the software budget which is below average at 10% of the IT spend and staff.

In the construction industry - the fastest growing area of IT spend - hardware and spend is higher than average, with services lower than the national average.

This may reflect the stage of tooling up for project-focused IT systems and e-procurement.

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The UK IT Expenditure Survey by Computer Weekly/Kew Associates provides the most comprehensive breakdown of IT user spending in the UK. For more details please contact 01895-632163 or 020-8652 3099

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