Nearly every organization likes to measure its activity and spending by comparing themselves to other like firms in their peer group. Over the years, IT spending has been one area that companies always try to measure this way.
The vendors who supply IT products and solutions have used similar metrics to help define market segments and accounts that may spend more than others and be more attractive candidates.
We took this concept to the companies in The Global 5000 — the 5000 largest companies in the world that are both public and private, across all countries, all industries. Using available research data we find IT spending as a % of revenue that can range from less than 1% for the construction industry to 6% in the financial services industry. The next step was to apply these IT Spending percentages for each industry sector to each company in the database.
Adding up the totals across the database, we find a total of $1.4 trillion is spent on IT products and services by the 5000 largest companies in world. Looking geographically, the countries with the largest amount of IT spend are the 3 largest by GDP as we would expect — US, Japan and China. Those 3 countries represent 52% of the large company spending in the world. Taking this a step further, if you are a provider of IT products or services and participate in markets around the world, a good metric for your business would to have 50% of your revenue coming from these 3 countries.
Looking at this from an industry perspective, the largest spending industries are Financial Services, Oil and Gas companies and the Telecommunications segment. That’s where the money is.
When we look at key industries within various countries the data does show some key differences. For example, in the US, Health Care and Retailers come up strong in the top industries. In Japan, Autos and Industrial segments rise to the top. All of these metrics are worth considering as companies look to decide what markets, industries and geographies to focus on.
We’ll look to explore more details on IT spending by industry and country in the coming posts.
For more details on The Global 5000 database — click here