US private companies increase IT budgets, with focus on growth and efficiencies

With a focus on new growth opportunities and efficiencies, 29% of US private companies surveyed for PwC US’s Private Company Trendsetter Barometer plan to increase their IT budget over the next year. In 2010, US private companies allocated approximately 5.6% of their budgets to IT. This investment is expected to rise to an average of 6.6% over the next 12 months, a year-to-year increase of nearly 19%.
Nearly half (46%) of Trendsetter companies have identified important and/or sizeable areas or functions in need of IT upgrade or improvement, and 18% of those businesses report that they’ll require additional budget expenditures to make the necessary changes. Overall, these companies are a faster growing group, forecasting an average revenue growth rate of 11.5% over the next year versus 9.1% for all other private companies. More international marketers cite critical IT upgrade concerns (54% versus 39%) and say they need additional spending to cover the required upgrades (26% versus 10%) than their domestic-only peers.

Trendsetter companies’ IT investments will be focused on two main areas over the next 12 months: innovation (36%) and maintenance (64%). Significantly, companies in the innovation segment allocate a larger portion of their budgets to IT than those primarily in the maintenance segment - 9.53% versus 5.01%.

Key areas of planned IT investment for private companies over the next one to three years are information security (70%), next-generation data management and analysis (50%), enterprise mobility via tablets and handheld devices (48%), social media/networking (46%), and cloud computing (40%). Companies in the innovation segment are significantly more likely to invest in next-generation data management and analysis, social media/networking, virtualization, cloud computing, and context-aware computing than those in the maintenance segment.

The leading business objective of IT investments for private companies is to make their business processes more efficient and effective (90%). Other top objectives include better managing enterprise data (75%), optimizing business information/analytics (73%), making the business more agile (58%), and attracting new customers (58%).

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