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Decline and divide in IT spending

NCC Media Release

From the National Computing Centre, Manchester UK. 12th September 2011.

A new survey from the National Computing Centre, ‘The Benchmark of IT Spending and Strategy 2011’ shows that UK organisational Information Technology (IT) spending remains in decline. A significant divide in IT spending between public and private sectors is emerging.

IT spending declines

The survey reveals that levels of spending on IT by UK private and public sector organisations continues to fall. The median level of total IT spending in this year’s Survey is £3135 per end user, compared to £3227 in 2009 and £3275 in 2008. Expressed as a percentage of turnover/revenue the median IT spending figure represents just 2.48% of expenditure, down slightly from 2009 when it was 2.54%. There are significant variances between sectors however; a quarter of respondents reported an end user spending figure of less than £2096, whilst at the other extreme a quarter of respondents reported a figure higher than £5152.

Financial sector remain high spenders

The finance sector reports the highest spending ratios with a median spend of £9348 per end user, though this figure represents a 9.3% fall since 2009. The lowest spending sectors are charities (with a median spend of £2123 spent per end user) and education (with a median spend of £2264 per end user). Overall IT spending is predicted to decline by 3.7%. When inflation is factored in, the downturn in IT spending will exceed 4%.

Public sector – significant decreases in budgets

IT in the public sector has been hit particularly hard - 91% of central government and 81% of local government respondents expect significant decreases in their budgets. Whereas in the private sector the majority of companies are expecting their IT budget to remain roughly the same or to show a modest increase.

Steve Fox, Managing Director at The National Computing Centre said, “Difficult times are driving business to act differently, look for the lowest costs and consider alternatives to the previous status quo – the IT department is not immune to this. For most, investments in IT have fallen year on year in real terms. The danger with this is that a lack of investment will impede the pace of recovery when the economic climate improves. The IT department has a pivotal part to play in aiding the streamlining of business processes, introducing operational efficiencies and being innovative in the delivery of solutions.”

Overall IT staffing levels decline slightly

For those employed in IT the future looks challenging. 28% of responding organisations predict a decline in staffing levels, whilst 51% expected numbers to stay the same; just one in five expected an increase in staff in the next two years. Despite recent reporting of staff cuts, the finance sector still employs the highest number of IT staff per 1000 users, at 64.2. ; The figure for local government is 17.1 IT staff per 1,000 users. Overall staffing levels will decline by 1.4%. The median level of IT staff for all sectors is now 22.2 IT staff per 1000 end users, compared with 25.0 per 1,000 users in 2009.

Fear of capital spending being postponed or cancelled

The most variable area of spending is capital/development (external spending associated with the acquisition and/or upgrading of systems) with one third of respondents predicting a decrease of 20% or more and 29% predicting an increase of 20% or more. Capital spending is the most susceptible to be cancelled when times are tough; 44% of respondents thought it ‘very likely’ ‘quite likely’ that application developments would be postponed or cancelled.

Operational spending, the ongoing costs associated with the operation and maintenance of the IT function, excluding staff averaged 39% of total IT spend, but is expected to decline by 6.4% over the year.

Steve Fox said, “With the threat of a double dip recession it is not surprising that spending remains depressed. The situation is a catalyst for widespread take-up of cloud, virtualisation and mobile working technologies, which promise similar levels of service, but can be achieved with less capital outlay, are scalable and enable organisations to save costs in other areas.”

The Benchmark of IT Spending and Strategy identifies the winners and losers in IT spending across 13 different sectors, for a range of criteria including operational, capital and staffing spending. The Benchmark also addresses spending intentions, strategic changes in providing IT and technological preferences.

About the Benchmark of IT Spending and Strategy

The Benchmark of IT Spending and Strategy 2011 canvassed the views of 160 organisations. Between them the respondents had nearly 740,000 employees and 680,000 end users and reported an aggregate spend of just over £2.3bn. The survey was conducted between November 2010 and January 2011. As well as collecting data on the spending plans of organisations it also provides an overview of some of the key strategic issues currently facing decision-makers in the adoption and implementation of IT technology.

The Benchmark is available from for £270. Discounts apply for NCC Member organisations.


About The National Computing Centre Ltd

The National Computing Centre (NCC) helps IT decision makers deliver effective solutions to business problems by bringing together users, experts and vendors to share experiences and develop best practices.

Press enquiries:

Michael Dean
National Computing Centre
Flint Glass Works
64 Jersey Street
Manchester M4 6JW
Tel: +44 (0)161 605 0855
Mob: (0)7703 501129



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