When it comes to information systems spending, executives may be willing to open the checkbook a bit more this year than last, but they’re not about to write a blank check.
According to the recently released Computer Economics 2005/2006 Information Systems Spending and Technology Trends study of U.S. and Canadian IT organizations, the median IT budget in the 2005 study rose slightly to $10.8 million, from $10.5 million in 2004. However, when measured as a percentage of revenue, IT budgets in 2005 actually declined to 1.7 percent of revenue, from 1.9 percent in 2004.
“Although the budget cuts of the early part of this decade are over, companies are still interested in keeping the costs of information technology under control,” said Frank Scavo, President, Computer Economics. “Executives are not willing to let the IT group consume a bigger piece of the pie.”
Mark McManus, Vice President of Research and Technology, added, “Because of the emphasis on cost containment, we predict that IT organizations will continue to focus on technologies that can be acquired at low cost, such as low-end servers, Linux, and open source software in general, and on initiatives that directly cut costs, such as server and storage consolidation and offshore outsourcing.”
The study, which tracks spending in twelve industry and government sectors, also found that IT spending increases are strongest in discrete manufacturing and in the services sector, where IT budgets increased 5.0 percent over 2004. The weakest growth is seen in the transportation sector, where IS spending increased only 0.5 percent.
A free 20-page Executive Summary is also available upon request.