New IT spend benchmarking report for the construction sector

A new IT Benchmarking report designed specifically for the construction sector has been published by The Knowledge Practice, in association with Construct IT (Salford University) and the National Computing Centre (NCC).

The survey report provides a comprehensive picture of IT expenditure and future plans in the UK’s Top 200 construction organisations covering building and civil engineering contractors, professional services/ design firms, house builders and property developers.

The aim of the report is to provide construction industry IT Managers, CEOs and Finance Directors with a clear representation of the impact that the latest financial and economic crisis has had on IT investment in the construction industry; a detailed comparison of current and planned IT expenditure in firms of similar type and size in the UK construction sector focusing on three principal types of construction business; a set of key trends for enterprise spend on areas such as hardware infrastructure, software, staff costs, telephony and data networking; access to industry-wide, enterprise-level IT benchmarks and IT investment ratios.

Key findings include:

- The total value of IT expenditure in the UK construction sector now tops £1 BN annually which represents 1.2% of total construction output value

- The average IT expenditure for contractors now represents 0.74% of turnover and shows that IT usage has grown by over 60% since the last similar benchmark study was undertaken in 1992 when the equivalent average IT expenditure was 0.45% of turnover

- Average IT spending per head is now approaching the all-industry median levels of £3,000 – a significant change from 20 years ago when this was last measured when the construction industry was firmly at the bottom of the all-industry league table for IT usage

- 25% of all IT expenditure in the construction industry is on telecommunications covering data networking, office telephony and mobile phones

- The general outlook for IT budgets in construction looks fairly lean with an overall reduction across all firms forecast of 4% compared with 2009 and with over 50% of companies predicting IT budget reductions of 10% or more

- Capital expenditure levels were pared back in 2008/09 by an average of one third. Companies are waiting to see how the economy improves before they are willing to reinstate funding for major software upgrade and infrastructure renewal projects. 90% of firms say are planning not to increase capital budgets until the outlook improves

- When funding is released, more forward thinking companies are targeting longer term cost reductions in recurrent expenditure by investing in modernisation of their IT infrastructure using newer approaches such as Software as a Service (SaaS), hardware virtualisation and Cloud services which it is claimed can offer firms potential overall cost savings of between 20% - 30%.

- Software is the only category of IT spend where firms have predicted that there will be an overall net increase. Budget categories of staff, hardware, networks, and telephony are all predicted to decline as a proportion of total IT budgets emphasising an established trend to seek the benefits of lower price levels of commoditised IT infrastructure services and to focus the funds released on new-breed of software applications which will be delivered within an overall budget neutral context.

The Building on IT report helps finding comprehensive answers to challenging questions of Senior Managers and re-evaluate how IT departments should be shaped in order to best add value to the business.