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Utilities increase their IT spending

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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 reach $18,4-billion by 2019, with an estimated 2014–2019 CAGR of 3,3%.

Analyzing current IT spending, total year-end IT spending by Western European utilities is expected to be $16,3-billion in 2015, with electricity companies accounting for the largest share of spending, at 67% or $10,9-billion of the total.

“As they navigate the perfect storm of market disruptions and digital transformation, utilities continue to invest in IT to become ever more competitive and continuously optimize their operations,” says Gaia Gallotti, research manager at IDC Energy Insights. “Software spending will see the most significant increase, growing at a 2014–2019 CAGR of 6.,%, reaching $4,8-billion by 2019. IT services also have a positive outlook, growing just below average at 2,6%, while hardware spending is expected to be almost flat, barely growing at 1,8% between 2014 and 2019.”

The report, which includes market sizing and forecast estimates for the utilities industry in Western Europe for 2014–2019, shows that:

* Electricity already accounts for the largest share of IT spending in 2015. The sub-industry is not expected to reduce its spending any time soon as it will have the fastest-growing, above-average CAGR between 2014 and 2019 (3,8%).

* Gas is also expected to continue to spend well in the forecast period, but spending will be below average at a 2014–2019 CAGR of 3%.

* The water sub-industry will have the slowest growth rate — significantly below average at 1,9% — though this is expected as companies in this subindustry are often smaller and more localised, making it more difficult for them to find financial resources to invest in IT, especially with the current economic situation (with the UK being the exception).

* The UK has the largest IT spending in the electricity sector, accounting for 23,3% of total electricity IT spending in Western Europe.