UK IT spending by industry: Despite cuts, security spending likely stable

While industries slash IT budgets, information security spending will likely hold steady.

Security consistently tops the list of concerns for most organisations and this will still be the case in the foreseeable future.

The Benchmark of IT Spending and Strategy 2011

IT spending is declining in the UK as organisations seek to cut costs and squeeze more work out of their systems and employees. That means a greater emphasis on mobile computing and virtualisation, although most organisations still recognise the need for security.

These findings come from The Benchmark of IT Spending and Strategy 2011 (.pdf), published by the National Computing Centre (NCC), and are based on responses from 160 organisations.

The biggest cutbacks in IT spending, by industry, are taking place in the public sector, where overall IT spending is set to drop by 29.9% in central government, 21.1% in local government, 14.8% in healthcare, and 8% in education.  Some areas of the private sector are also showing small declines, while business services, retail and wholesale, and professional services are showing an increase in IT budgets.

Overall staff spending is mixed, with 38% of organisations anticipating an increase, 34% staying about the same and 28% seeing a decrease. In total, overall staff spending for the next year will decline by 1.4%.

However, the responses indicate most industrial sectors recognise the need to protect the information they hold, even though they want to cut overall IT costs. “Security consistently tops the list of concerns for most organisations and this will still be the case in the foreseeable future,” the report predicts. “The other area strongly featured is the renegotiation of supplier contracts and this is set to increase in activity over the next two years as IT departments seek to reduce their outgoings.”

While security continues to top the list of organisational priorities over the last two years (compared with areas such as outsourcing, offshoring and green IT), few industry sectors mentioned it as a major priority when it comes to implementing specific technologies.

When asked about which technologies they were planning to implement, respondents placed server virtualisation first, followed by mobile technology and desktop virtualisation. Security was placed ninth on the list.

The median level of total IT spending in the survey was £3,135 per end user, down from £3,227 in 2009 and £3,275 in 2008. That represents 2.48% of overall business expenditure, down slightly from 2009 when it was 2.54%.

Financial services still spend the most, at £9,348 per end user, though that figure is down 9.3% from 2009. The lowest spending sectors are charities (£2,123 spent per end user) and education (£2,264). Overall, IT spending is predicted to decline by 3.7%. When inflation is factored in, the downturn in IT spending will exceed 4%.

Steve Fox, managing director at NCC said, “Difficult times are driving business to act differently, look for the lowest costs and consider alternatives to the previous status quo – the IT department is not immune to this.”

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