Companies Spending More on IT Budgets, Study Shows

UNT professor Leon Kappelman was the lead investigator on the Society of Information Management study released Thursday.

IT spending by companies increased markedly this year, up by the largest amount since the economic pressures from the Great Recession began to ebb in 2012.

That’s according to data from the Society of Information Management IT Trends Study that was released Thursday.

The study was led by primary investigator Leon Kappelman, professor of information systems, chair of the Information Technology and Decision Sciences Department, and director emeritus of the Information Systems Research Center in the College of Business at the University of North Texas.

The study, conducted annually since 1980, showed companies’ average IT budget rose to $107 million in 2017, a 23 percent increase over the average IT budget of $86.6 million in 2016.

More than 760 organizations and 469 chief information officers participated in the 2017 study, according to a release from SIM.

IT spending as a percentage of revenue rose from 5.04 percent to 6.08 percent in 2017. That’s a 20 percent increase, the largest annual increase since 2012.

IT spending as a percentage of revenue rose from 5.04 percent to 6.08 percent in 2017. That’s a 20 percent increase, the largest annual increase since 2012 SIM said. 

The study found that there are big differences in IT budgets across various industries.

The industries that spend the most as a percentage of revenue include IT hardware/software at 15.9 percent, not-for-profit at 11.6 percent, and financial services/insurance/banking at 9.7 percent. The industries that spend the least are retail/wholesale at 1.4 percent, construction/architecture at 1.6 percent, and energy at 1.9 percent, according to the study.

Overall 74 percent of organizations said they had an increase in their year-over-year IT budgets, while 20 percent reported a decrease.

“While small annual increases in industry differences are not uncommon, an increase of this magnitude nearly a decade into an economic recovery, and while IT operating costs are falling, point to a significant increase in IT investments aimed at increasing capability, strategic value, and digital transformation,” Kappelman said in the release.

Hiring trends also showed an upward trajectory in 2017, too. The study said that 61.3 percent of organizations reported an increase in recruiting and hiring IT personnel in 2017, up 56.1 percent in 2016 and 49.3 percent in 2015.

IT BUDGETS: CYBERSECURITY SPENDING DOWN AS A PERCENTAGE OF TOTAL

The study found there was a decrease in cybersecurity spending as a percentage of IT budgets this year, despite news reports of cybersecurity and data breaches around the world.

Spending of 5.3 percent of IT budgets this year went to cybersecurity compared to 6.2 percent in 2016.

“However, given the 20.6 percent increase in IT budgets this year, this still means cybersecurity spending as a percent of total revenue increased in 2017, and we expect this trend will continue,” Kappelman said.

The Society for Information Management is an organization for IT leaders, with nearly 5,000 members and 40 local chapters.

Feature illustration: Guirong-hao via iStockphoto

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