Since 2000, the number of large organizations reporting declines in their annual IS budget has risen steadily. This year the number of large companies reporting declines took a very sharp upturn, according to Computer Economics’ 2003 Information Systems Spending study. The annual study defines large organizations as having revenues of over $750 million.
Exactly 40% of large companies reported declines in the 2003, which is the highest number of declines reported since Computer Economics began tracking this statistic in 1989. In fact, last year (2002) ranks in second place with a significantly lower 28% reporting declines.
During this same reporting period (2000 to 2003), many large companies continued to report IS budget increases, with 2001 representing the high-water mark at 48%. However, when the numbers are examined more closely the increases look less positive. Overall, large companies that did report increases showed only modest dollar advances, while the companies reporting decreases often showed a more pronounced cut in terms of actual dollars.
2003 is shaping up to be a pivotal year according to our research data. The IS budget trends in large organizations have never been as polarized as they are this year. Typically, around one-third of the companies in the annual study report their IS budgets held steady year to year. This year, only 16% of the companies reported a “no change†status.
Computer Economics projects that the number of large companies reporting IS budget declines will steadily recede over the next few years. More importantly, the actual dollar IS budget increases in many of these companies will begin to rise as well. Figure 1 illustrates IS budget changes in large organizations since 2000, including our projection for 2004.
Figure 1
IS Budget Comparison Large Organizations 2000 – 2004
|
Large Organizations (Over $750 M in Revenue) |
2000 |
2001 |
2002 |
2003 |
(projection) 2004 |
|
No change in IS budget |
35% |
32% |
34% |
16% |
25% |
|
Decrease in IS budget |
18 |
20 |
28 |
44 |
37 |
|
Increase in IS budget |
47 |
48 |
38 |
40 |
38 |