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IT Spending: Looking Up

Two studies reveal: Higher ed IT spending is coming on slowly, behind larger economy growth—but it’s coming.

IDC has revised its earlier, gloomier look at IT spending. This fall’s report, “US Education IT Spending, 2004-2008 Forecast” ( forecasts that after a slight dip in ’04, the education market will recover from recent lean years to slow and steady growth overall, with the largest increases showing up in network equipment.

According to the study, the current conditions in the general economy are being reflected in education—only more slowly. Traditionally, education budgets tend to lag behind the economy, so the education market will respond slowly as the technology market overall inches forward. The higher education market will not see substantial increases in 2004, but good news: slightly higher IT budgets will become the norm in 2005.

6 Key Higher Education Market Drivers

Following are six selected findings from IDC's report:

1—Reporting requirements. Pressure from external sources to meet regulatory reporting requirements and provide demographic data has increased the necessity for new investment in enterprise HR and student registration and records applications.
2—Extending the enterprise. Universities are renewing their ’90s outreach to corporations and non-traditional students, and are re-equipping spaces used for continuing ed with top-quality networks, computers, and presentation systems.
3—Using IT to cut costs. Both publics and privates are contemplating IT strategies that save costs: Technology for distance and distributed learning, and consolidation of administrative and education applications are possibilities. (Many universities are taking a wait-and-see position about consolidation until sufficient standards and common practices emerge.)
4—Wide area network (WAN) growth. The proliferation of handhelds and laptops is pumping up demand for wireless connectivity. Network infrastructure continues as the hot market-growth area in higher ed technology markets.
5—Outsourcing. Migration from legacy apps to Web services is turning the tables from in-house management of homegrown systems to outsourced IT services and vendor solutions.
6—Security. Education IT managers see security as a significant, ongoing issue, and will give products that boost security greater attention.

While no technology gets predictions of astronomical growth, wireless leads in contributing to increased spending on networks. And beginning in mid-2005, the technology to watch is WiMax, based on the new IEEE standard 802.16. This wide-area version of WiFi—with coverage up to 30 miles at varying speeds—could allow quicker installations on campuses and may eventually relay VoIP traffic between university buildings.

The 2004 Campus Computing Survey data ( ) suggest some relief from the budget cuts that have cast a shadow over campus IT efforts and investments the past few years. Just one-fourth of the campuses participating in this year’s survey report budget cuts in academic computing, compared to 41.3 percent of 2003 participants, and 32.6 percent in 2002. One-fourth (25.3 percent) report reduced funding for administrative computing, compared to 42.3 percent in 2003, 31.0 percent in 2002, and 18.3 percent in 2001. Private colleges and universities are faring a bit better with budgets than publics: 41.2 percent of private universities reported increased funds for academic computing, compared to 31.9 percent of public universities. Among four-year colleges, almost half (47.4 percent) reported increased money this year for academic computing, compared to just 24 percent in public colleges. In community colleges, almost two-fifths reported increased funds for academic computing efforts for the current academic year.

U.S. Higher Education IT Spending by Segment, 2003-2008 ($M)

2003 2008 2003-2008 CAGR (%)
Servers 254


Desktops, laptops,
& workstations
printers, & storage
Software 687
IT services 907
Total 3,489 4,147 3.5
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