IT spend in the UK makes slight recovery

The quarterly UK IT Expenditure survey by ComputerWeekly and Kew Associates has found growing IT spend. The survey reports that IT spending increases grew by 5.2% in the third quarter of this year, compared to a growth of 4.8% in the previous three month period.

The quarterly UK IT Expenditure survey by ComputerWeekly and Kew Associates has found growing IT spend. The survey reports that IT spending increases grew by 5.2% in the third quarter of this year, compared to a growth of 4.8% in the previous three month period.

Between Q3 2002 and the end of 2004, organisations have been improving their productivity with lower associated increases in IT expenditure. Prior to Q3 2002 and since the start of 2005, economic and IT expenditure quarterly growths have been in step. In the intervening period, investment in IT has been at a relatively lower level. The start of this period coincided with a much stronger focus by companies on profitability, says Kew

Comparisons of IT spend growth with ONS data on companies' net rate of return shows that the two measures were in step until Q3 2002. The divergence over the past three years indicates that companies have become more profitable without proportionate increases in IT outlay: it seems IT budgets were squeezed to help maintain and increase profitability. Kew says net rate of return equates to return on investment and is defined as operating surpluses over capital employed for an organisation as a whole, not just the IT activity.

In terms of disparities between companies of different size, growth in SMEs' IT outlay had slipped further in Q3 2005; it had advanced by 6.1% down from 7% in the previous quarter. Larger organisations experienced IT expenditure rise of 4.7% in the third quarter of 2005, up from 3.5% in the prior quarter. This was the fastest quarterly expansion over the past year.

For more information on the survey please contact Kew Associates at itexpenditure@kewassociates.co.uk

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