New Initiatives To Drive IT Growth Through 2011
Growth in IT spending is expected to outpace overall economic growth in the United States for the remainder of the year, though IT growth in education will lag behind most other sectors, according to a new report from market research firm International Data Corp. (IDC).
Projected Growth
Overall, IDC forecast growth of 5.6 percent in IT spending in the United States in 2011, led by the healthcare industry, media, and professional services, which are each expected to exceed the average and increase IT spending by more than 7 percent this year. Growth in U.S. gross domestic product (GDP) is forecast at 3 percent for the year.
IDC indicated that IT spending in education would increase by about 3.4 percent in 2011, an amount that actually more than doubles the education sector's projected GDP growth, which IDC placed at about 1.5 percent.
Education's IT budget growth ties that of the insurance industry and exceeds just a few other verticals (construction, banking, securities/investment services). Twelve other sectors, including government, will outpace education in IT budget increases this year.
Budget Breakdowns
Some of the factors driving the overall growth include long-overdue hardware refreshes and investments in core software.
According to IDC's Ted Dangson, verticals director for IT budget benchmarking and IT wallet research, hardware spending will increase by 8 percent by the end of the year.
"When you take a look at the breakdown in the budgets, the majority of the growth is really expected on the hardware side," Dangson said in an IDC webcast this week. He said that among the organizations surveyed, many indicated that they've "delayed refreshing or replacing older hardware, and they're really stretching out the life of these products. And at this point, either because they can't delay those hardware replacements any longer or because the economy is finally starting to recover, we're expecting that hardware spending is going to be quite robust."
Software investments will grow by about 5 percent this year, he said, while spending on outsourced and contracted IT services will increase 4.3 percent.
Increasing Investments in New Initiatives
In terms of where those budgets are being spent, IDC reported that, as expected, the bulk will be earmarked for infrastructure (a slight decline to 43.1 percent in 2011 versus 45 percent in 2010). The percentage of the budget reserved for essential software (system software, CRM, ERP, security software, etc.) will also drop a bit this year, from 36.5 percent in 2010 to 33 percent in 2011. But significant growth will be seen in the area of new initiatives, which will increase by nearly a third, from 18.5 percent in 2010 to 23.9 percent in 2011.
Driving the growth in new initiatives are:
- Cloud technologies;
- Security;
- Data center consolidation;
- "Smart" solutions, including business intelligence and analytics;
- Mobile technologies; and
- Social media.
Dangson said these have all traditionally made up a "relatively small" portion of the IT budget. "However, it appears that this is rapidly changing."
Further, among large enterprises, the top IT initiatives for 2011 included security (with 31 percent citing that as a top priority), analytics (19 percent), and smart technologies (17 percent), according to IDC.
The IT spending data and forecast were presented in an IDC webcast held this week. An archive of that webcast, "2011 U.S. IT Spending Outlook by Vertical: Latest Trends and Key Priorities," can be freely accessed with registration.