Spikes Cavell's insight report reveals IT spend among 500 of Europe's top companies down for first time in five years

Citation

(1999), "Spikes Cavell's insight report reveals IT spend among 500 of Europe's top companies down for first time in five years", European Business Review, Vol. 99 No. 5. https://doi.org/10.1108/ebr.1999.05499eab.003

Spikes Cavell's insight report reveals IT spend among 500 of Europe's top companies down for first time in five years

Spikes Cavell's insight report reveals IT spend among 500 of Europe's top companies down for first time in five years

Keywords: IT, Surveys business

European IT market researchers, Spikes Cavell & Co and IT Week, the newsweekly for the connected enterprise and European market intelligence providers, recently announced the results of The IT Week Fast Track 500 report, which ranks 500 of Europe's top companies by IT budget, country and sector, as well as profiling Europe's most innovative companies. Overall trends indicate a 4.23 per cent net decrease in IT spend, dropping from £51.5 billion in 1997 to £49.3 billion in 1998.

Says Tony Westbrook, IT Week's Editor-in-Chief, "The enormous effort to achieve year 2000- compliance and euro-compatibility, compounded by severe skills shortages, has meant many organisations have put valuable projects such as supply chain management, ERP and E-commerce - on hold. But it is in such a harsh climate that the bravery to innovate will reap maximum rewards: those that refuse to stand still will find themselves streets ahead of their competitors when the crises have passed."

Only one company, Siemens, broke the billion pound barrier this year. Royal Dutch Shell, who exceeded £1 billion in IT investment last year, is less than £900 million. For the first time in five years, an Italian company is represented in the top ten biggest IT spenders in Europe (Table I).

More than 20 per cent of the Top 500 companies are British and out of all the European countries, the UK has the most companies represented in this survey. It is Germany, however, that has the highest overall IT spend. France takes third place honours in the IT spend by country, yet Italy, traditionally Europe's fourth largest market, trails behind both Switzerland and The Netherlands in terms of comparative IT spending (Table II).

Most innovative companies in the survey

The IT Week Fast Track 500 report also devised an Innovation Index, citing the most innovative companies in the survey of the Fast Track 500. Respondents were scored on their use or planned use of a number of technologies: Web-based sales, extranet, intranet, handheld computers, NT desktops and access to the Web and e-mail among users. In the UK, highest scoring companies were Courthaulds, Halifax Building Society, and Woolwich Building Society.

Telecoms and banking buck the trend

Two sectors, telecoms and banking appear to be investing heavily in IT. Deregulation in the telecommunications industry in Europe is increasing cross border competition. Alliances, takeovers and the need for increased data requirements are all boosting investment in IT infrastructure. This, coupled with the convergence of the Internet bringing increased data traffic and the integration of communications, e-mail and telecommunications, means large telecoms companies need IT investment in order to stay competitive.

Banking is perhaps the most information intensive of all the industry sectors, and as a sector spends the most on IT, investing more than £10 billion according the report. The vast majority of banks have a massive existing technology infrastructure that needs both maintenance and renewal over time. The banking industry also began addressing Year 2000 and EMU issues much earlier than many other sectors, and need a continuous level of IT investment to maintain their existing infrastructure, as well as keeping competitive with an array of customer service systems, such as PC and telephone banking.

Intranets and extranets

A total of 81 per cent of organisations say that they already have an intranet while a further six per cent say they are planning one. The process of implementation is an ongoing one as only half the firms surveyed have connected between 81 per cent and 100 per cent of their PCs to the network.

Says Tony Westbrook, "There are two main barriers to the implementation of extranets. First the year 2000 makes organisations reluctant to use extranets until they are convinced of customer/supplier millenium-compliance. Second, EDI, a tried and tested system is still used by 64 per cent of the organisations in this survey."

Concentration of mainframes into fewer companies

Another key trend is the concentration of the mainframe population into fewer companies.

Says Jon Newman, Research Director at Spikes Cavell & Co, "The proportion of top 500 companies totally without mainframes is expected to rise to over 40 per cent within the next two years, indicating a major shift towards a server-based approach, which is fueled by the increasing viability of NT as an enterprise operating system. Those companies that do require 'heavy duty iron' are expecting to buy enough to result in a growth of the mainframe population by over 20 per cent over the same period."

About Spikes Cavell & Co

Founded in 1991, Spikes Cavell & Co monitors how the largest businesses in Western Europe use IT and telecommunications technology. Leading vendors in the IT and telecommunications industries use Spikes Cavell's services to support strategy formulation and marketing planning; emerging technology adoption, expenditure and buyer behaviour trends; and to improve the effectiveness of tactical sales and marketing programmes. Spikes Cavell's international headquarters are in Newbury, Berkshire, UK. The company has offices in Paris and Munich.

About IT Week

IT Week, the newsweekly for the connected enterprise, launched on 18 May this year to address the news needs of the UK's most senior IT professionals. With a uniquely focused controlled circulation of 55,000 within the UK's largest and most IT intensive sites, IT Week fills a gap in the UK market for timely, relevant, objective product and business focused coverage from enterprise to the desktop.

About Ziff-Davis

Ziff-Davis (NYSE: ZD) is a leading integrated media and marketing company focused on Internet-related technology, with principal platforms in print publishing, trade shows and conferences, online content, market research, and education. The company provides global technology companies with marketing strategies for reaching key decision-makers.

For further information, please contact: Alison Amey, IT Week. Tel: 0171 903 6922; E-mail: alison_arney@zd.com Vanessa Land, Devonshire Marketing. Tel: 01895 621191; E-mail: devonshire@aol.com Jon Newman, Spikes Cavell & Co. Tel:01635 550449; E-mail: jon@spikes-cavell.com

Copies of Spikes Cavell's Insight Report - the IT Week The Fast Track 500, can be purchased from Spikes Cavell & Co for £399. To order, please contact Caroline Mann at Spikes Cavell & Co on: Tel: 01635 550449; or E-mail: caroline@spikes-cavell.com