27 August 2012 – According to a new IT spending forecast report published by IDC Energy Insights, total year-end IT spending by Western European utilities is expected to be US$10.5 billion in 2012, with the majority (62.1%) of this spend dedicated to IT services. IDC Energy Insights forecasts that by 2016, western European utilities’ IT spending will surpass US$13 billion, with an estimated 2011–2016 compound annual growth rate (CAGR) of 5.1%.

The report predicts that,according breakdown of IT spending by technologies and sub technologies over a five-year span, this will see expenditure on software as the most significant boom area. Growth on expenditure on software will be at a 2011–2016 CAGR of 7.2%, reaching US$3.1 billion by 2016. IT services also show a positive outlook, growing at just below average (4.9%), while the hardware sector will show below average growth (3.1%) between 2011 and 2016.

"The need to reduce costs and achieve operational excellence together with the need to comply with energy policies and regulation will continue to drive utilities’ ICT investments," Gaia Gallotti, senior research analyst, IDC Energy Insights, says.

The report shows that electricity companies take the most significant share of IT spending in 2012, at 66.9% (US$7 billion). The gas and water segments are considerably smaller, but still important, at 16% and 13% respectively.IT services make up 62.1% of total IT spending for utilities, making it the largest share with over $6.5 billion in 2011. Behind IT services are packaged software and hardware, which make up 22% and 15.9% of IT spending respectively.Among the IT spending on IT services sub technologies by utilities, implementation and operations make up the largest share with 34.4% and 25.2% respectively.