News

IDC: Hardware Refreshes To Drive 2011 IT Spending Growth

• By David Nagel
• July 04, 2011

According to a recent report from market research firm IDC, IT spending in the United States is expected to grow by 5.6 percent in 2011, nearly double the expected 3 percent growth in GDP.

Leading the IT spending charge are the health care, media and professional services industries, which are each expected to exceed the average and increase IT spending by more than 7 percent this year.

Some factors driving the overall growth in IT spending 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. 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.

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
• Datacenter consolidation
• "Smart" solutions, including business intelligence and analytics
• Mobile technologies
• 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 a recent IDC webcast titled "2011 U.S. IT Spending Outlook by Vertical: Latest Trends and Key Priorities," an archive of which can be freely accessed with registration.