IT Spending Creeps Up A Tiny Bit In North America

Published: July 9, 2012

by Timothy Prickett Morgan

The good news is that IT budgets are on the rise in the United States and Canada, according to a recent poll of IT shops performed by Computer Economics. The bad news is that the growth is not very much and is only a tiny bit more than was seen in 2011.

Computer Economics just finished up talking to more than 200 IT departments in North America for its IT Spending and Staffing Benchmarks 2012/2013 study, which was just released and which is based on the twice yearly survey that the company does across small, midrange, and large enterprises. Based on what CIOs are saying when they take the survey, Computer Economics is projecting that IT operational budgets in 2012 will increase by 2.2 percent this year. That ain't much of an increase compared to last year's relatively anemic growth, and it is not like the 4 percent growth budgets had in 2008, but as you as see, it sure looks better than the double bagels of 2009 and 2010.

"The modest recovery in IT spending we saw last year is continuing, but it is far from robust," said Frank Scavo, president of Computer Economics, in a statement accompanying the release of the report. "Hiring remains weak and smaller companies are still not showing as much strength as we would expect in an economic recovery."

You can see an executive summary of by clicking here. The full report costs $9,500, but you can look at the summary for free and buy chapters a la carte as well.

Of the IT shops polled, 31 percent said they would have a lower operational spending in 2012 than they had budgeted for this year, which is up from 23 percent who said they were busting out of their 2011 budget this time last year. About 53 percent of those polled said they expected for the operational spending--meaning not including their capital equipment spending--to come in at what they budgeted, and 16 percent said they would spend less than they budgeted for this year. The economic slowdown in China, the unevenness of the recovery in America, and the debt crisis and looming threat of recession in Europe--not to mention the absolute interconnectedness of all economies these days--makes it hard for CIOs to be optimistic. So does that glaring look from the CEO and the kick under the table by the CFO.

Only six months ago, the people from small businesses polled by Computer Economics were much more optimistic about growth in the IT budget, as The Four Hundred reported, with small businesses expecting 2 percent growth compared to a half point of growth for mid-sized companies and eight-tenths of a point for large enterprises. This would normally be a good sign, as Scavo explained six months ago, with SMBs being a leading indicator in a recovery. But now the larger companies are accelerating their budgets and SMBs are stuck in the mud.

"The IT spending recovery appears to be stuck in the early stage," Scavo said. "If we saw more growth in the budgets of smaller organizations, we would have more confidence that the rate of improvement was accelerating."

I would say that it is more like Groundhog Day and we keep living the Great Recession over and over, sometimes on a big screen, as in 2009, and sometimes on a little screen (perhaps a smartphone) here in 2012.

Capital spending is also up a little bit, with the average across all of those polled being a 2 percent increase in spending on hardware and software. That's a tad better than the 1.8 percent growth in 2011, and a whole lot better than the zero, zero, and zero growth that those polled said they had in 2008, 2009, and 2010. About 56 percent of those polled said they would spend the same this year on capital stuff as they did last year, with 15 percent saying they will spend more and 29 percent saying they will spend less.

This one is a bit perplexing: 40 percent of those companies polled by Computer Economics said they would be adding to their IT department headcounts, which is good, but the median headcount across all companies remains about the same. So it looks like some people are doing some firing, too: 27 percent of those polled, in fact.

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