Focus on Web, Networks Helps Drive IT Spending Up

Spending on information technology (IT) by US business organizations increased 8.7 percent as a percentage of gross revenues in 2000, compared to a 3.4 percent increase in 1999, according to a study by the META Group.

The study, “Worldwide IT Trends & Benchmark Report 2001,” found that companies are investing in networked computer and Web-based applications. Twelve percent of applications developed in the US utilize the Java programming language, up from 1 percent in 1999. C++ posted a 12.7 percent gain. Nearly one-third of worldwide development is targeted at client/server, 27 percent at mainframe environments, and 19 percent at the network and workstation environment.

“Internet-based operations are taking precedence in IT organizations,” said Howard Rubin, META Group research fellow. “As business becomes more reliant on the Internet, efficient file servers and fast networks are becoming critical elements of success.”

With the focus on networking, the majority of US budgets was spent on data center and operations. Non-US companies are spending most on networks and data centers. Both US and non-US companies project IT budget increases in the next year, with US companies emphasizing maintenance and support, and non-US companies expending the most effort on new development.

Around the world, the IT work year is significantly longer than in past years, the study found. Working hours per year are up 36 percent from last year in the US and up 30 percent in non-US companies. The average IT professional in the US works 2,157 hours per year. The average IT professional outside the US works 2,138 hours per year.

“This remarkable increase in working hours could be explained by the growing business dependence on networking and Internet technologies to accomplish IT goals,” Rubin said.

The study also found that investment in training worldwide is on the rise for the first time in three years. The average number of training days per year is 8.05 in the US, compared to 8.44 elsewhere. Both US and non-US companies have increased their training days over last year. While US employers are staffing at lower academic levels than companies outside the US, the study found that US employers are hiring a higher percentage of graduate-level employees.

“Perhaps we are seeing a learning curve as IT professionals work to master new tools,” Rubin said. “Both US and non-US companies experienced another increase in application portfolio size from last year. In the US, there was 4 percent growth, while elsewhere in the world, there was 35 percent growth.”

Compensation in the IT industry is up 6.6 percent in the US, compared to 6.4 percent in 1999. The greatest increase is in network-associated areas such as Inter/intranet specialists and network analysts/architects. Compensation among non-US companies is up slightly over last year, but for an equivalent of one IT salary in the US, an organization in India could hire 9.1. Switzerland has the world’s highest IT salaries, 18 percent higher this year than US IT salaries, but down 36 percent from 1999.

IT staff turnover rates also increased this year, according to the survey. The rate in the US jumped to 11.4 percent, up from 8.4 percent in 1999. Turnover at non-US companies rose 12.6 percent, from 9 percent in 1999. The highest turnover rates were reported in India (16 percent), China and Switzerland (14 percent), the US, and Canada (10 percent).

The hardest jobs to fill in the US were project leaders, metrics personnel, testers, and intranet developers. Development programmers and network analysts were comparatively easier to recruit. Among non-US companies, testing and metrics staff, as well as quality assurance personnel, were the hardest to recruit. Project managers and systems analysts were comparatively easier to hire.

One area that did not see growth was the capacity to develop new products, as measured by the lines of code developed per professional. US new development productivity fell to 6.22 KLOCs (thousands of lines of code) per professional per year, compared to 9.0 KLOCs in 1999. Non-US companies saw productivity decline 9.1 KLOC to 7.05 KLOC.

Software quality in the US, as measured by defects per KLOC, also saw a decline, according to the survey. The US defect rate was 1.77, up from 1.56 in 1999. Outside the US, the defect rate dropped to 3.59 KLOC, from 3.85 in 1999.

The META Group study is drawn from a database of more than 16,000 IT contacts representing 6,000 companies in 28 nations. Data is reported from 35 industry sectors.

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