Regulation drives utility IT spending

IDC believes Western European utilities will spend $10.5 billion over 2012, with the majority of that spend – at 62.1 percent – dedicated to IT services.

By 2016, the analyst house expects IT spending to roll past the $13 billion mark, with an estimated compound annual growth rate of 5.1 percent between 2011 and 2016.

Software spending in the utilities industry will enjoy the largest growth, at a compound annual growth rate of 7.2 percent, reaching $3.1 billion by 2016. IT services will experience growth of 4.9 percent, but the hardware sector will grow below average at 3.1 percent between 2011 and 2016.

According to IDC’s Energy Insights report for August 2012, electricity companies take in the lion’s share of IT spending for 2012 at 66.9 percent, representing $7 billion. Gas and water also make up sizeable dents at 16 and 13 percent respectively.

Of all IT spending, services makes up the most for utilities, but behind that – at least in 2011 – are packaged software and hardware, at 22 percent and 15.9 percent respectively.

Senior research analyst Gaia Gallotti said that the need to reduce costs and achieve operational excellence, coupled with complying with energy policies and regulation, will ensure companies will continue putting money into utility ICT.