IT spending jumps 50% since start of 90s

IT expenditure has increased by more than 50% since the start of the decade, according to IDC Research's latest figures. Expenditure was measured as a percentage of overall revenue, with IT at 2.25% of expenditure, up from 2.04% last year. The figures come from a survey into the attitudes and intentions of 5500 IS executives in New Zealand and Australia.

IT expenditure has increased by more than 50% since the start of the decade, according to IDC Research's latest figures.

Expenditure was measured as a percentage of overall revenue, with IT at 2.25% of expenditure, up from 2.04% last year.

The figures come from IDC's latest "Forecast for Management" survey into the attitudes and intentions of 5500 IS executives in New Zealand and Australia.

Spending on IT jumped by 10% in 1998, and the future looks even better, with respondents anticipating increases of around 5% over the next 18 months.

But the money being spent on IT is increasingly moving away from the traditional areas of hardware and software — as ever, the Internet has taken its share of the expenditure.

"Hardware and software now make up around 28% of this budget, while network and line costs are ... at 21%," says the report.

Good news, also, for employees — recruitment and staff retention rated its highest position ever at seventh on the list of challenges facing CIOs, up from 11th place last year. This result is also reflected in the staff turnover rate — up from a constant 11% to 18.7% last year and now 21.89%.

"Not surprisingly, businesses are turning to outsourcing to address the challenge."

The report says that "staff attrition was even higher ... in New Zealand". IDC attributes this to the "deregulated nature of the New Zealand labour market" and points out the dangers of Australia following New Zealand down that path.

"Implementing such labour laws in Australia would compound the staff retention and skills shortage challenges reported by local CIOs."

IDC was surprised to find that despite all its estimates, the use of external staff had actually decreased slightly this year.

In 1996 and 1997, 14% of the budget was allocated to these people, but this year it's dropped to 12%.

"I am noticing a recent trend for people who have traditionally been consultants to take full-time positions," says analyst, Peter Hind. He believes this is due to IT professionals building up their skill sets in preparation for post-Y2K projects.

"CIOs were bullish about their plans for thin client computing solutions," says the report, highlighting a new area for the survey. The phenomenal growth of the PC as the "desktop terminal" has slowed somewhat, peaking this year at around 69% of all terminals being PCs. Next year that figure looks set to fall for the first time - down to 67%. Notebooks stay on 13% of the market for a second year.

Thin clients currently comprise only 6% of the market, but that looks set to grow to 9% next year. Hind believes CIOs are paying more attention to Windows CE as "a serious alternative... operating system for the desktop."

Despite this trend, the corporate standard desktop just keeps getting fatter.

"Today respondents reported that the typical PC was a Pentium with 32 Mb of RAM, with 2-12 Gb of disk." Only 37% of respondents claimed their standard model included a CD-ROM. New Zealand bucks the overall trend here as well. Kiwis claimed to upgrade PCs to a new standard after four or five years instead of three, which is the more popular choice in Australia.

Perhaps the most intriguing fact in IDC's report is that respect for IT is growing within the business market.

"More CIOs report to the CEO than at any time. As such, not only are executives giving the IS department their money, they are also prepared to invest a more scarce resource; their time."

Join the newsletter!

Error: Please check your email address.
Show Comments
[]