Positive outlook for Irish IT spending, IDC finds

6 Jul 2006

Spending on technology among Irish organisations this year is set to rise, with analyst firm IDC forecasting the most positive outlook in the country for some time.

IDC’s annual user survey, IT Trends and Expenditure in Ireland, has found that whereas the public sector drove much of the growth in IT expenditure last year, private companies across a range of industries have said they plan to increase their outlay on technology products and services in 2006.

Almost half of all the organisations polled for the survey (48pc) expect their IT spending to be higher this year than last. IDC noted that the most interesting change from 2005 is that only 15pc of respondents said they expected their spending to be lower, in contrast with 29pc who gave this answer last year.

However, the survey uncovered clear lines of demarcation based on size of organisation. The proportion of organisations expecting to increase IT expenditure in 2006 is much higher among the large (62pc) and medium (57pc) business segments than among small (38pc) and very small (37pc) companies. IDC interviewed 301 executives in commercial and public sector organisations for this year’s survey.

The positive feelings about IT spending contrast with reduced optimism over how the respondents’ businesses are likely to perform this year. IDC found that 64pc of organisations surveyed expect sales or revenues to be higher this year than last, down from 70pc last year. Here again, the smaller the business the lower the prospect: barely over half of organisations with fewer than 100 employees expect to improve on last year’s performance.

IDC consultant John Gilsenan, who wrote the report, commented: “Smaller businesses continue to feel the heat of competition and rising costs. There is little evidence that significant numbers of small businesses are looking to IT investments to gain competitive advantage.”

Many of the IT challenges cited by organisations relate to upgrades and new implementations, the survey found. Joint top of the list is the challenge of installing and migrating to new systems, suggesting that IT suppliers will be kept busy, IDC said. More organisations are feeling the challenge of hardware and software upgrades than last year.

IT expenditure intentions are more positive than last year for hardware, external IT services and data communications. IDC calculated this in terms of the proportion of organisations expecting an increase in spend minus the proportion expecting a decrease. The figure for packaged software is down this year but only slightly, from 16pc to 14pc.

For the coming year, security and mobility solutions are the areas in which most organisations intend to invest. Security is of most interest to organisations in the finance and government sectors, with the latter also strongly showing demand for mobility solutions.
By Gordon Smith