IT Spending

Information Technology (IT) spending is investment in resources used for information processing, such as computers and software. These IT resources help companies to convert, store, protect, process, transmit and retrieve information. As technology continues to change, develop and grow, companies are spending more on IT than they have in the past. The World Information Technology and Service Alliance (WITSA) reported that worldwide spending on information and communication technology nearly doubled from 1993 to 2001. The WITSA also estimated that worldwide IT spending increased from $810 billion in 1993 to $1.38 trillion in 2001.

According to various reports, IT spending will continue to increase in the next few years, but not by the same rate that it did in the years leading up to 2005. A report by Computer Electronics released in July of 2005 found that US and Canadian firms were budgeting more for information systems than they had in 2004, the median budget rising to $10.8 million in 2005 as compared to $10.5 million in 2004. But when measured as a percent of revenue, the budgets for IT spending actually declined to 1.7 percent of revenue is 2005 from 1.9 percent in 2004.

Aside from private and public firms, IT spending plays a large role in government budgeting. A report released by INPUT in May 2005 found that the US government budgeted $71 billion for technology spending in fiscal 2005. However, it also predicted that annual rate of growth in government spending on IT would slow down in the next three years. The report said that government technology expenditures will grow to $92 billion in fiscal 2010, an increase from the $71 billion in fiscal 2005. INPUT said that cyber-security will continue to drive the need for IT spending as technologies develop and hackers find new ways to access systems.

Underinvesting in IT? Over budget? Get insight and strategy from the daily FierceCIO hot sheet. Daily emails help you get the competitive advantage for smart IT spending.