2 min read

IT spending slightly down this year

Slowdown in buying by mid-size Canadian organizations is major factor

IT spending in Canada this year is expected to reach $40.93 billion, down slightly from $41.35 billion in 2005, according to new reasearch from Ipsos-Reid.

Spending among mid-sized companies is expected to decline by four per cent overall, although this market is still the largest IT revenue-generating segment in Canada, accounting for $23.9 billion in 2005 and $22.9 billion in 2006. This drop in expected spending is the major factor influencing the lack of overall IT spend in 2006.

Overall projected spending in the large enterprise segment will increase by seven per cent, from $4.6 billion in 2005 to $4.9 billion in 2006. Low growth of two per cent is expected in the small business segment from 2005 to 2006, bringing overall spend in this segment to $13 billion in 2006. A total of 375 companies were part of the second annual study.

Lise Dellazizzo, vice-president of Ipsos-Reid’s Canadian Information Technology Practice, said this report provides a sobering perspective of corporate demographics in Canada, and valuable insight into actual and projected IT spend from leaders in each segment of the business community.

This analysis will provide clarity and a deeper understanding of the most important revenue-generating IT buyers in Canada by providing insight into their spending plans and IT budgets for the coming year, she added.

Key findings

IT spend will remain basically flat in 2006, staying close to the mark of $41.4 billion (all dollar amounts in Canadian funds) in 2005 and $41 billion in 2006 for the three major IT sectors represented in this report.

The mid market represents the most lucrative IT spend opportunity overall based on volume, average per company spend, and total spend generated.

The highest per company spend is still in the large enterprise segment, with a significant proportion focused in very large enterprises of 1,000+ employees.

Average per-company spend in this sub segment outstrips per company spend in the mid market by a three to one margin.

There is a deceleration in mid market spend from 2005 to 2006, causing an overall decline of four per cent in this segment. This significant drag is caused by a decline in hardware and infrastructure spends of 18 per cent from 2005 to 2006. Software and services spend is slated to increase, partially offsetting the decline in hardware and infrastructure spend.

Seven per cent growth is expected in the large enterprise segment. Most of this activity will be fuelled by an increase in software spend of 33 per cent. Growth will be tempered by an overall decline in IT services spend of six per cent.

This Ipsos Reid research report is focused on examining growth trends and spending patterns in the mid and large enterprise sectors. It included 254 mid-and-large companies in its analysis.