PracticePeople In PracticeUK firms committed to cost-effective IT

UK firms committed to cost-effective IT

UK companies will continue to invest in IT that delivers clear cost benefits, despite budget cuts and the disastrous financial performance of the technology sector.

This means that suppliers of complex enterprise packages, which offer an unclear return on investment, will be the main victims of any cutbacks.

But the 2001 IDC Worldwide Black Book claims that the pace of IT spending in Europe will slow only slightly, with annual growth rates falling from 12 per cent to 11 per cent.

Investment in internet-related infrastructure and front-end applications will continue – or even increase – as companies strive to reduce sales and supply-chain overheads.

As a result, according to analysts, fears that cuts in UK budgets might mirror the big drops experienced in the US – annual growth rates fell from 11 per cent in 2000 to just seven per cent this year – may be overblown, say analysts.

‘The recession is going to be amazingly good news for ecommerce. It will change its nature entirely over the next few years, from being this flashy, cute, new world economy to a mechanism for large organisations to reduce costs,’ said analyst Martin Butler.

‘Where there is a massive spend, and companies can see no short-term benefit, then they might be put off,’ continued Nigel Hickson, head of ebusiness at the Confederation of British Industry.

‘But I’d like to think that, for companies, spending on IT is something which can cut costs,’ he added.

‘The web is now central to so many companies’ business strategies that they are not going to turn their back on it overnight, even if the economy in Europe starts to slip back over the next year,’ said Stephen Minton, IT markets manager at IDC.

While companies are committed to investing in business-to-business software because they believe it can help them cut costs, expenditure on business-to-consumer technology will also continue so firms can support existing customers.

‘The feature developments of ecommerce sites may slow down, but the essential processor upgrades will have to go ahead or sites will not be able to cope with the increase in traffic due to the growth in the market,’ said Stuart Rowe, ecommerce director at retailer HMV.

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