• December 13, 2005
  • By Coreen Bailor, (former) Associate Editor, CRM Magazine

Mapping Out IT Expenditures

California, New York, and Texas ruled IDC's evaluation of the top-10 states for business IT spending, according to the report "U.S. Business IT Spending 2005-2009 Forecast: The Top 10 States." These three states represent 30 percent of the U.S. total IT spending in 2004; Georgia, Texas, and Florida will experience the fastest growth rates over a five-year span. The report also states that the top-10 spent a composite total of $169 billion in 2004, roughly 56 percent of total business IT spending in the country. (This includes state-level forecasts by 14 industries and three technology segments.) Georgia, for example, has benefited from relatively robust economic momentum in Atlanta, where biotech has emerged as an important growth industry. Strong investment from the recovering business sector has driven rebounding performance in a number of industry areas, including telecom service providers, according to Jessica Goepfert, director of U.S. vertical industry research at IDC. "For the state as a whole, this has somewhat mitigated the continuing struggles of manufacturing sectors, including Georgia's long-established textile industry," Goepfert says. The Texas economy gathered momentum throughout 2004 and into 2005, with recovery in most important macroeconomic drivers throughout the year, according to Goepfert. "Energy exploration has been on the rise, and oil prices have continued to rise through most of the past two years, although this puts some pressure on the refining industry. The economy as a whole is more diversified than in the past and less dependent on the energy industry, and general trends have been positive across the manufacturing, business services, technology, and telecom sectors." Florida's overall economy has maintained solid growth, with tourism and related spending benefiting from the relatively weak U.S. dollar and the construction boom continuing, as the state's retiree population continues to grow. But 2004's hurricane season significantly impacted the state's tourism arm. Aside from the hurricane effects, however, tourism remains an element of the state's fiscal health and its position as a retirement hot spot "is also an important driver of related economic activity in the construction, healthcare, and financial services industries, among others," she says. When segmented by 2004 IT expenditures, Illinois, Florida, Pennsylvania, Ohio, New Jersey, North Carolina, and Georgia, join California, New York, and Texas on the list of top spending in 2004. When the focus shifts to growth, however, specifically, five-year CAGR, North Carolina, New Jersey, California, Illinois, New York, Ohio, and Pennsylvania join Georgia, Texas, and Florida in rounding out the top 10. Overall, refreshing the infrastructure and expanding the network of connectivity will continue to be the focal point in many companies, according to IDC. Moreover, the research firm contends that vendors of smart handheld devices, volume servers, systems infrastructure software, and services spending on operations and maintenance support will enjoy the fastest acceleration. "The good thing is that a lot of the IT spending is fairly concentrated in a handful of states and industries," Goepfert says. "This means that IT vendors can really focus their valuable sales resources appropriately. That said, IT vendors would be well-served to also take into account which industries are driving this spending and tailor their offerings and marketing accordingly. As each state has it's own story, each industry has its own unique pain points for which business executives are turning to IT to address." Related articles: IT's $6 Billion Spending Spree
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