IT organizations spend over $264 billion on gear and services - in 2007?

Sometimes US Census data can be a little outdated upon its release and I have to think this is one of those cases.  Considering that the economic meltdown began in earnest in 2008 and continues unabated this year, its hard to imagine and a number of more recent studies show companies spending less, much less on network gear.

With that in mind the US Census bureau today took a look at IT information spending -- in 2007.  That year businesses spent a total of $264.2 billion on all information and communication technology equipment, including computer software, an increase of 4.4% from the revised 2006 estimate of $253.0 billion.

The bureau then broke down spending trends between capitalized and noncapitalized spending which it defines as expenditures such as software purchases, operating leases and rental payments for IT equipment, purchases and payroll for developing computer software, and software licensing and service/maintenance agreements.  Capitalized expenditures include all spending for IT equipment including computer software chargeable to asset accounts for which depreciation or amortization accounts are kept.

Some of the more interesting Census findings included:

  • Noncapitalized IT spending in 2007 was $94.4 billion (almost 36 % of total spending), not statistically different from 2006, the Census Bureau said. Capitalized spending in 2007 increased by almost 6% percent to $169.8 billion (64  % of total spending).
  • Of total 2007 noncapitalized IT spending ($94.4 billion), purchases of computer equipment accounted for $20.2 billion (21.4%), an increase of 7% from 2006. Operating leases and rental payments accounted for $17.8 billion (18.8%). Computer software expenditures accounted for $56.4 billion (59.7%).
  • Operating leases and rental payments. Of the $17.8 billion spent on operating leases and rental payments, computer and peripheral equipment accounted for $12.1 billion; IT equipment excluding computers and peripherals accounted for $4.5 billion, a decrease of 18.2 % from 2006; and electromedical and electrotherapeutic apparatus accounted for $1.2 billion.
  • Computer software expenditures. Of the $56.4 billion spent on noncapitalized computer software, $30.5 billion was for purchases and payroll for developing software; $25.9 billion was for software licensing and service/maintenance agreements, an increase of 11.4% from 2006.
  • Of total capitalized ICT spending in 2007 ($169.8 billion), purchases of ICT equipment accounted for $106.5 billion (62.7%), an increase of a little over 5% from 2006. Capitalized purchases and payroll for developing software accounted for $63.3 billion (37.3%), an increase of 6.8 % from 2006.
  • Of the $106.5 billion spent on capitalized IT purchases in 2007, computer and peripheral equipment accounted for $58.6 billion; IT equipment excluding computers and peripherals accounted for $42.8 billion, an increase of 9.5% from 2006; and electromedical and electrotherapeutic apparatus accounted for $5.1 billion.

Such growth number of course fly in the face of more recent study result that show IT spending flat-lining.  For example, 23% percent of respondents to a ChangeWave Research study this month said their companies will reduce or halt IT spending in the second quarter of this year. 

ChangeWave, an investment advice firm, conducted a survey Feb. 11-15, garnering responses from 2,013 people involved with IT spending in their organizations.

Only 15% of respondents said spending would increase in the second quarter, a nine-point drop from the company's previous survey in November. Just 10% reported that first-quarter spending has been greater than planned, a fall of seven points compared with the last survey. Twenty-seven percent of respondents said their companies have spent less than planned during the first quarter, a rise of three points.

Meanwhile, 43% said their companies are giving a "green light" to second-quarter spending, meaning conditions are normal. But that represents a nine-point drop from the last study and the lowest level ChangeWave has seen in more than four years.

Layer 8 in a box 

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