Information Technology: Tighter Budgets Aside, IT Vendors Still Innovate - InformationWeek
Software // Enterprise Applications
07:20 PM
Darrell Dunn
Darrell Dunn

Information Technology: Tighter Budgets Aside, IT Vendors Still Innovate

The industry taps new technologies, such as multicore processors, server blades, and virtualization software, to create more cost-effective deployment strategies.

The IT industry has been engaged in a multipronged attack on improving operational efficiencies. Not surprisingly, it's a leader in the use of relatively new technologies such as multicore processors, server blades, and virtualization software to create more cost-effective deployment strategies.

Those efforts are being completed on tighter IT budgets, with IT industry respondents to the InformationWeek 500 survey saying they will spend an average of 3% of their companies' annual revenue on IT, the lowest percentage in five years and down from 4.4% in 2003.

The good news is that revenue for many IT companies is increasing. So even though the percentage of dollars dedicated to IT is shrinking, half of respondents expect total IT spending this year to exceed that of 2005. Nearly two-thirds of their IT budgets will be spent on ongoing maintenance, with just 38% going to new projects.

Wireless e-mail capabilities have been adopted quickly within the IT industry, with 83% of respondents reporting that the technology is widely deployed. Other significant efforts include business intelligence tools, with 67% reporting wide deployment, and service-oriented architectures, with half reporting wide deployment.

Almost two-thirds of all IT companies want to create new products and services for customers this year, and about half have sought to patent, trademark, or copyright an IT-driven business process, product, or service within the past year.

At No. 6, Sun is the highest ranking IT company on the InformationWeek 500 list.

Budget Breakdown

Tech Innovation

Inside Information Technology
3% of Industry's Annual Revenue Devoted to IT
38% of IT Budget Devoted to New Projects
50% of Companies Expecting 2006 IT Spending to Exceed 2005

Business Change
63% Creating New Products/Services for Customers in 2006
67% with Global Supply Chain
50% Deploying Business Intelligence Tools to Raise Productivity

Return to the 2006 InformationWeek 500 homepage

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