Q4 UK IT spending grows to buck trend

Bucking the trend: UK Plc's IT spending rose 9.2 per cent in Q4

With IT expenditure in Q4 2009 bucking the trend of declining business spending, leasing firm Syscap has claimed companies can no longer delay investing in technology.

Figures from the Office for National Statistics reveal overall business investment in 2009's closing quarter stood at £27.1bn. This represents a sequential fall of 5.8 per cent and a 24.1 per cent decline on the corresponding period in 2008.

However, private sector spending on IT hardware and software jumped 9.2 per cent from Q3 to Q4. But the £2.9bn figure posted during 2009's closing quarter still represents a year-on-year drop of 18 per cent.

Hardware spending continued to bounce back in Q4, after a torrid start to the year. Between Q4 2008 and Q2 2009 UK Plc's investment in hardware fell 45 per cent, dropping from £1.79bn to £991m.

But Q3 spending rose 26 per cent sequentially, and Q4 saw another quarter-on-quarter rise of 11.6 per cent. Spending on hardware in 2009's final three months reached £1.4bn. Q4 software spending stood at £1.49bn, a sequential rise of 7.1 per cent but a year-on-year drop of 13.5 per cent.

Across the whole of 2009, companies' software spending also fell 13.5 per cent year on year to £5.6bn. Full-year hardware spending in 2009 fell 21.4 per cent annually to £5.2bn.

Philip White, chief executive of Syscap, claimed UK businesses that had waited up to two years now had little choice but to invest in IT. He singled out the transition to Windows 7 as a major driver for hardware investment.

“Two consecutive quarters of rising IT investment proves that businesses are now looking to invest in IT in order to capitalise on the recovery," he said. “Maintaining legacy and ageing systems is simply not cost effective in the long term.

"Many of these businesses will not have upgraded their computer hardware for a number of years now as plans to invest in new PCs, servers and networking were put on the backburner. In many cases purchasing decisions have been delayed for the entire two year duration of the credit crunch.

“Investment in IT hardware is often necessary before software systems can be upgraded – that is what we are seeing now.”