Could Obama initiative reignite global IT spending?

19 Mar 2009

A new study estimates that approximately US$101.2bn in technology spend will be stimulated in energy, government and healthcare over the next five years as part of US President Barack Obama’s American Recovery and Reinvestment Act (ARRA).

This could have a beneficial impact on US technology firms based around the world, as well as technology businesses that sell into the US, including the Irish indigenous base, which exports US$100m worth of goods and services to the US each year.

IDC Industry Insights estimates that the ARRA will see approximately US$101.2bn in technology spend generated over the next five years.

The estimate includes both information technology (IT) spend – traditionally the focus of IDC’s market research – as well as non-IT technology in these sectors, such as smart meters, in-home display devices, energy management systems, and renewable energy technologies surrounding wind and solar power.

The ARRA will fund some of this spend directly, but additional technology spending will be stimulated as the legislation provides incentives and tax rebates for the projects it promotes.

“While the ARRA does not provide detailed information about the exact amount of technology spending that will be allocated, the Industry Insights companies performed an extensive review of the legislation and held discussions with industry technology buyers to estimate the amount of technology spending that is likely to be generated as a result of the ARRA’s key initiatives in energy, healthcare and government,” said Meredith Whalen, group vice-president and general manager, Vertical Market Business Units at IDC.

IDC’s Industry Insights anticipates that the more than US$40bn investment the ARRA targets for the energy industry will stimulate approximately US$77.6bn in technology spending. The energy initiatives that will experience the most growth will be related to intelligent grid, renewable energy, and energy efficiency.

The healthcare industry is expected to see US$21.1bn in technology spending, with the largest portion concentrated on promoting deployment and usage of electronic medical and electronic health records, including incentive payments to physicians who implement and use these tools.

Additional funds will be steered to technology solutions that measure the comparative effectiveness of programmes and clinical intelligence solutions.

Within the government sector, the ARRA will provide approximately US$2.5bn in technology funding to federal agencies for new and existing programs, including allocations for the Social Security Administration, the Department of State and the Department of Homeland Security.

By John Kennedy