Hard Facts: September 30, 2002
Business investment in technology equipment and software increased marginally in the first quarter of 2002, following five straight quarterly declines. The rate of growth accelerated slightly in the second quarter.
But how much further can technology investment increase when data also shows that overall business infrastructure investment continuing to decline? CRN analyzed historical trends in business investment in technology equipment and software, as a percentage of overall business infrastructure investment, to find clues.
With few exceptions, this percentage has risen steadily but slowly. In 1984, technology made up 24.8 percent of business infrastructure investment, reaching 34.3 percent by 1998, an average yearly gain of about one-half percent.
The early 1980s was an exception, with the percentage soaring from 19.6 percent in 1981 to 24.1 percent in 1983. But this was also the time of the introduction of the IBM PC, the first successful PC clone and a host of new software and peripherals.
The data also shows that periods when the percentage of technology investment increases dramatically are usually followed by periods during which the percentage grows much more slowly or even declines. Such was the case in 1984-85, in 1993-94 and again in 2001.
If these historical trends hold, then the potential for a sharp uptick in the percentage of investment that comes from technology is limited, in the absence of a truly revolutionary product introduction or a steep recession.
Such is the case now. Economic data shows that the percentage of business infrastructure investment coming from technology equipment and software currently lies fairly close to its historical trend. As such, a rebound in overall business infrastructure investment will be one of the keys to a sustained recovery in technology investment.
