Medium-sized firms top IT big spenders league

Medium-sized businesses playing catch-up to larger enterprises are set to be the big IT spenders over the next three years, according to new figures from analyst IDC.

Overall IT spending in Western Europe is expected to have grown 3.4 per cent in 2004 to $267bn, largely on the back of strong growth of 5.4 per cent in the mid-size sector - companies with between 100 and 499 employees.

The IDC study, Western European SMB IT Spending 2003-2008, said: "In view of the increasing availability of solutions fitting their needs, and a more strategic approach to IT investments, these companies are catching up with large enterprises and represent a very attractive segment for IT vendors."

Small and medium-sized businesses with up to 499 employees are expected to account for around 53 per cent of total IT spending in Western Europe in 2004 and this is predicted to remain the same through to 2008, though there are wide variations within that group.

While medium-sized firms are spending 5.4 per cent more on IT, small companies with fewer than 100 employees are predicted to show lower than average growth in IT spending between now and 2008, with an especially high proportion of IT laggards among the very small companies with fewer than 50 staff.

Strong growth of 4.3 per cent is also predicted for 2004 in large companies with between 500 and 999 employees, but "cautiousness" still characterises the IT investment of very large companies with over 1,000 employees.

IDC, however, claims that as the economy continues to improve and stabilise these very large companies will increase their IT spending and return to higher than average growth between now and 2008, driving demand in many innovative areas such as RFID, IP telephony and wireless LANS.

In terms of vertical sectors, small and medium-sized healthcare institutions are predicted to show the highest growth in IT spending over the next three years in the face of the need to transform and modernise their entire operations.