Savvy spending drives rise in budget growth

IT investment up as many IT departments deliver more for less

Investment in IT has risen in the past six months, with annual growth in IT spending reaching 5.6% in the second quarter of this year, according to the latest Computer Weekly/Kew Associates IT spending survey.

Growth in IT spending was up from 5.2% in the first quarter of 2006 and 3.9% in the fourth quarter of last year, according to the research, which is based on responses from Computer Weekly’s database of 60,000 IT budget holders.

One factor in the spending growth could be growing confidence that IT departments are able to deliver a greater return on investment than in the past. This modest but significant increase in spending allows IT directors to offer an enhanced service to the business, said Kris Wicka, managing director of Kew Associates.

Ben Booth, chairman of the British Computer Society Elite group, highlighted three areas where IT directors were able to do more with a relatively small increase in budget: offshore development, getting greater value from telecoms suppliers, and the continued improvement in hardware price and performance.

Colin Simpson, group systems manager at brewery and pub chain Fuller, Smith and Turner, said the commoditisation of both hardware and software technology was allowing his department to do more for the business within the same budget.

“Our budget is the same as it was five years ago. That is largely because of lower costs – old machines go out and the new ones cost less to build.”

Simpson has deployed technologies such as Citrix thin clients to reduce the cost of IT management, and has benefited from the lower cost of what were once niche software products.

“We are currently redeveloping our business intelligence system using Microsoft technologies.” A lot of the products come bundled with SQL, which is a lot cheaper than ¬using best-of-breed products, he said.

Leasing hardware can not only reduce costs, but also offers greater transparency on pricing, said Simon Merry, head of IT at manufacturing company Chemring.

Merry said hardware could be bought for a quarter to a third of the cost of a similarly specified product three years ago. “We try to keep the spending solid and upgrade,” he said.

Rob Bold, technical consultant at Brintons Carpets, said, “There is a continual downward trend in server prices, and virtualisation now offers important benefits. We recently bought 64-bit AMD Opteron-based servers for our Citrix system. Mainstream 64-bit computing has come down in price significantly since the arrival of Intel’s Itanium.”

 

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