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U.S. R&D IT Investment To Rise, But Lags Behind Europe

IT investments are on the rise in North America, but they remain behind Europe, according to a new report from Forrester Research. In "Governing IT In The Enterprise: Business Technographics North America And Europe," senior analyst Nicholas Wilkoff notes basic differences in the way American and European companies approach IT budgetting.

Wilkoff observes that North American companies "are finally coming out of their innovation hibernation," and that they will devote 6.2% of their IT budgets to research and development this year, compared to 4.2% in 2003. However, that doesn't stack up to their European counterparts, who will allocate 8.5% of their IT budgets to innovation in 2004.

According to Wilkoff, European firms typically show greater optimism for IT, noting that "compared with their North American counterparts, European enterprises spend a greater percentage of their IT budget on new investments and R&D and a greater percentage of their revenues on IT." European firms devote 37% of their IT budgets to new investments, compared to a conservative 30% in North America.

European firms typically have a more centralized IT decision-making process, with CIOs much more likely to report directly to their corporate chief executives. Indeed, if anything, Wilkoff notes that the trend to IT management centralization has begun to slow in North America. He observes that "twice as many North American enterprises describe their IT shops as decentralized this year compared with last."