Worldwide Spending Through 2001 on Y2K Correction Represents Just 2.9 Percent Of Total IT Spending, According To IDC

FRAMINGHAM, Mass., Sept. 21, 1998 — The year 2000 date correction problem has undoubtedly pressured IT executives to devise plans to redress their internal and external computer systems by December 31, 1999, to avoid dire consequences.

However, research from International Data Corporation (IDC) has consistently shown that cost estimates to resolve the problem, although significant, are by no means exorbitant or foreboding. In fact, total worldwide spending from 1995 to 2001 will reach $296.74 billion, or 2.9 percent of total IT spending, according to IDC's The Financial Impact of the Y2K Problem report.

"Companies faced with a Y2K problem have undertaken to solve it at minimum cost and have not increased their IT operating budgets enough to allow their IT organizations to continue spending at the same level as before on non-Y2K

projects," said Thomas Oleson, research director for IDC's research and advisory service for IS professionals. "Instead, these companies have shifted priorities and managed to reduce spending or defer projects in other areas so that the total IT budget has increased at only about a 14 percent compound annual growth rate in the past three years."

IDC released its estimates as part of its continuing research efforts to realistically evaluate the status and cost of solving the year 2000 date coding problem. IDC's research is based on information from in-depth Y2K surveys conducted in the United States and Europe, with sufficient size to be accurate within plus or minus five percent of the estimate, as well as on the 1998 Global IT Survey results from interviews with nearly 12,000 small, medium, and large businesses worldwide, representing 80 percent of all technology spending.

Key Insights

Worldwide spending to resolve the Y2K problem will peak in 1998 at $87.42 billion, or six percent of total IT spending, the highest percentage between 1995 and 2001. In 1999, total spending will slip 8.7 percent.

The economic crisis in Asia/Pacific defers that region's financial push into 1999, when 5.2 percent of IT spending will be on Y2K.

In 1998, Y2K spending in Europe is greater than Y2K spending in the United States by $1.4 billion because of the combined effort on financial applications with the Euro project that must be ready by January 1999.

Emphasis will shift from large mainframe renovation to desktop and client/server applications in 1999.

IDC predicts that corporate IS budgets early in the next century will return to about the same percentage of corporate revenue as in 1996.

The Financial Impact of the Y2K Problem report (IDC #B16787) reveals Y2K spending between 1995 and 2001 for four categories — internal, external, hardware, and software — by four geographic regions: United States, Europe, Asia/Pacific, and the rest of the world. Worldwide Y2K spending as a percentage of total IT spending by region, 1995-2001, is also presented. To purchase the report, please contact Cheryl Toffel at 800-343-4952. Visit www.idc.com for a complete table of contents and list of tables and figures.

An executive summary (IDC #B17070) of this report is a feature of the current IDC Executive Insights and is available free on the IDC web site.

For more information about IDC's research and advisory services for IT professionals, contact Tony Membrino at 508-935-4334.

Additional Y2K Research

The Special Report on Year 2000 Project Status with Two Years to Go (IDC #B15777) looks at crucial year 2000 factors at small and large companies, including:

Status and expected completion dates as well as strategies to fulfill the project

Priority ratings of business functions

Outsourcing strategies

Application area status

Impact on salaries and turnover

Cost and financing

About IDC

Headquartered in Framingham, Mass., International Data Corporation provides IT market research and consulting to more than 3,900 high-technology customers around the world. With a global network of 375 analysts in more than 40 countries, IDC is the industry's most comprehensive resource on worldwide IT markets, products, vendors, and geographies.

IDC/LINK, an IDC subsidiary, researches and analyzes the home computing market, leading-edge technologies in telecommunications and new media, and the convergence of computing and consumer electronics.

IDC's World Wide Web site (http://www.idc.com) contains additional company information and recent news releases, and it offers full-text searching of recent research.

IDC is a division of International Data Group, the world's leading IT media, research, and exposition company.

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