Irish IT Market Maintains Growth Path But Pressure on Budgets Remains, Says IDC

After a rebound in 2004, the Irish IT market is set to continue growing in 2005, but IT departments in many organizations are facing pressure to cut IT spending, according to the findings of the latest edition of IDCís annual user survey, IT Trends and Expenditure in Ireland. While the vast majority of organizations expect business to be better in 2005, many face challenges that mean they need to keep costs down. This will be to the detriment of IT expenditure in many cases. As a consequence, IDC expects that growth in the IT market will be slower than that of the economy as a whole.



As a guide to the health of the market, 45% of organizations expect their IT expenditure to be up on last year, while a significant 29% expect lower spending this year (up from 23% in 2004).

The primary business challenges that organizations are facing are increased competition followed by rising costs. Of course, the IT function is not immune to this pressure to cut expenditure. This is highlighted by the fact that the biggest IT challenges are keeping up to date with technology and keeping down the cost of IT. It is increasingly clear that organizations, many of which are facing intense competition, are not looking to IT investment as a positive contributor to increased competitiveness as they might have done previously, but as a cost to be controlled. In this, the Irish situation mirrors that in other European countries.

As was the case last year, large organizations (500 employees) are particularly positive, with 34% more expecting an increase in IT expenditure than a decrease. This is good news for the larger IT vendors that supply the corporate sector. Government organizations are among the large organizations planning to spend more. Suppliers of IT products and services to smaller organizations are likely to find the going tougher.

The outlook for hardware is moderately positive, with 37% of organizations expecting the amount they spend to rise. A similar proportion expects their software spend to increase. Only 28% of organizations surveyed expect IT services expenditure to rise, however. When further questioned about the use of new IT services, the survey found a lot fewer organizations expecting to buy new services than in previous years. It seems that the purchase of external services is the first thing to be outlawed under cost-cutting measures. This makes things more difficult for suppliers that are even more dependent on product sales for revenue.

Uptake of broadband Internet access continues with 37% of organizations in the survey claiming this is their primary access method. The findings suggest that this will cross the 50% mark within the next year. Dell continues its strong position in the Irish IT market, with one in four organizations naming it as their primary IT supplier, up from 17% in 2004. It is also considered the company with the most enhanced reputation, as it has been for four years in a row.

Note on Survey: The 2005 edition of IDCís IT Trends and Expenditure in Ireland (Doc #SR11M, August 2005) involved interviewing 301 IT executives in commercial and public sector organizations of all sizes and across a range of industry sectors in the Republic of Ireland about their IT expenditure and intentions. Interviews were conducted in May/June 2005.