Metrics 2.0: IT Budgets as Percent of Revenue at Highest Level Since 1997

Median corporate IT spending in 2006 across all industry sectors in the U.S. and Canada is 2% of revenue, according to the 17th annual Computer Economics IT spending and staffing study.

The 2% ratio is an increase from 1.7% in 2005, 1.9% in 2004. This year's ratio is the highest that this metric has reached since 1997, when it reached 2.2%.

The median growth in IT spending on a dollar basis across all respondents this year is 4.1%, outpacing the 2005 U.S. GDP growth rate of 3.5% in 2005.

The median increase in IT staff this year is only 2.0%, about half the rate of the increase in IT spending.

"Companies simply have more money to spend this year," said Frank Scavo, President, Computer Economics. "But we see most of the new spending going toward hardware, software, and outsourcing, with not as much toward adding to the IT staff."

The study found that IT spending growth is strongest in business services, where it shows a 9.7% increase over last year, followed by healthcare, pharmaceuticals and medical devices, retail, and banking and finance organizations. Weakest growth, though still positive, is seen in the process manufacturing, utilities/energy, and wholesale distribution sectors.

Business & Market Intelligence

IT Budgets as Percent of Revenue at Highest Level Since 1997