Tuesday, July 10, 2007

IT budgets are lagging behind corporate revenues

Over at Computer Economics, we've just published our 2007/2008 IT Spending, Staffing, and Technology Trends study.IT spending, staffing, and technology trends

One of the key findings is that the median IT budget growth rate in the U.S. and Canada is accelerating to 5.0% this year, from 4.1% reported in 2006. At the same time, the median IT budget as a percentage of revenue is falling to 1.8%, from 2.0% last year. The only way to interpret these two statistics is to understand that IT spending is lagging behind corporate revenues.

This is not bad news. What it means is that IT managers generally are able to support the growth of the business without corresponding increases in IT spending. Our study shows that the large majority of companies are increasing their IT spending--but they are doing it at a pace that is less than the growth of the business.

In the last part of the 1990s, IT budgets grew at much greater rates because of Y2K and the dot-com boom. Then, during the recession in the early part of this decade, IT spending actually fell in a significant number of companies. From 1997 through 2003, IT budgets were a story of boom-and-bust.

What I like about today is that these major disruptions in IT spending appear to be over--at least for now. We seem to have entered a period where most companies are expanding their IT budgets in a restrained but consistent way. This is a far easier environment in which to plan IT investments.

On the staffing side, increases in headcount are somewhat more restrained, but most companies are adding IT staff members this year. And, there's still no end to the increase in the level of outsourcing.

These findings and more are presented in the study. There's a complete description on the Computer Economics website. There's also a press release.

No comments: