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Technology / Data Centre

Record £34bn spent on IT, highest since recession peak

Investments in IT hardware and software have hit an all time high since the height of the financial recession in 2009.

Business spend in information and communications technology increased 24% to £34.4 billion last year, compared to businesses’ IT capital spending of £27.6 billion in 2009, according to BNP Paribas Leasing Solutions

BNP found that private sector IT investment has now exceeded its pre-crisis peak of £30.9 billion in 2008.

The growth in IT spending is being leveraged by software investments, which represent 80% of companies IT spend.

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The company found that software spending was 6% up last year to £27.5 billion, from £25.8 billion in 2013. In Q1 2015 businesses have spent £6.9bn on software.

Aingaran Pillai, CTO at Zaizi, told CBR: "Whilst there are certainly positive signs that the recession period is receding for the UK’s IT sector, I don’t think we can count our chickens just yet. There is much flux in the global economy – China being a key one – that makes companies nervous about what the future holds. IT spend will be impacted by these factors.

"The rise in software spend demonstrates organisations need to be smarter and faster, but they need to ensure they are investing in the right technologies that will help them to streamline their work processes to support the business that they are now and the business they want to be in the future.

"Ultimately, companies investments are only smart if they are future proof."

Yusuf Yeganeh, MD of Microbyte Solutions, told CBR: "With more investment in infrastructure the IT sector is finally getting the boost that it needs after the recession.

"More digital and tech businesses are starting to see the UK as their homes, and this has led to an increase in the need for IT support. Start-ups such as these are leading the way in digital business, and as this sector continues to grow, so will the need for IT and advanced technology solutions."

As the spending in software raises, this is proof that companies are digitalising themselves, preparing for a smart future, according to Yeganeh.

He added: "If businesses do not go digital they are going to be left in the dust, as companies with more advanced IT solutions can move forward and develop every element of their business allowing them to be future proof.

"Many businesses are easily scared off by the digital revolution, but it is a time to embrace it and prepare for the even bigger changes that are ahead."

The report also revealed that managed IT services funded by leasing can help businesses keep IT costs under control.

BNP said that the managed service model allows businesses to keep IT costs under strict control by outsourcing much of their IT requirements for a transparent all-inclusive monthly fee.

Tristan Watkins UK Country Manager for BNP Paribas Leasing Solutions, said: "Leasing can help smaller IT suppliers to put these packages together, wrapped into a single fee. The leasing provider can fund all of the initial costs, which only leaves future costs such as ongoing maintenance to be funded by the supplier.

"For IT vendors, being able to provide a managed service helps them to build valuable, long-lasting customer relationships. They prove their expertise by providing on-going support, making them a valued partner not just a one-off supplier. The predictability of the monthly payments is also an attraction."
This article is from the CBROnline archive: some formatting and images may not be present.