Cautious IT spending predicted for 2003

IT spending is expected to grow slightly in 2003, according to two new reports, as technology buyers grapple with a continued economic downturn and the prospect of a US-led war with Iraq.

          IT spending is expected to grow slightly in 2003, according to two new reports, as technology buyers grapple with a continued economic downturn and the prospect of a US-led war with Iraq.

          Forrester Research predicts a 1.9% growth in IT spending this year over 2002. CIO Magazine (US), meanwhile, reported that CIOs it polled in February expected to spend 5.2% more on technology over the next 12 months, yet their spending expectations remained flat from January to February.

          CIO Magazine (US), based in Framingham, Massachusetts, garnered its results using its Tech Future Growth Index (TFGI), which projects IT activity over the next 12 months by polling hundreds of CIOs.

          While CIOs spending expectations held steady, their priorities have shifted a bit, the magazine reports, with executives saying that more of their money was earmarked for security software and developing business-to-business and business-to-consumer transactions. Meanwhile, investments in infrastructure software and computer hardware are expected to tick down.

          And while Forrester predicts a modest increase in IT spending for 2003, it says that mid-size firms were expecting to spend a little more, reporting a 2.6% spending hike compared to the average 1.9% growth rate. These firms will concentrate their investments in business intelligence tools and data mining and analytical software, Forrester reports, as they try to get the most value out of existing investments.

          In this vein, companies are increasingly looking to leverage the net by spearheading projects involving web service standards, and are cutting back on outside consultants and contractors.

          In fact, the number of firms completing at least one project using the XML (Extensible Markup Language) or SOAP (Simple Object Access Protocol) Web standards grew from 11% at mid-2002 to 31% currently, Forrester reported.

          The Cambridge, Massachusetts, researcher also predicted that finished goods manufacturing sector will increase spending by 7.4% in 2003, and IT spending among the high-tech industry will stage a rebound after a brutal 2002. The financial sector, which has historically had high rates of IT spending growth will reverse course into negative growth, however, although it will still spend the most on IT compared to other industries, Forrester said.

          IT buyers' guarded spending is not a surprise, according to both reports, given the continued shaky economic climate and prospect of war. While technologies that supply bolstered security and the ability to leverage existing investments stand to gain in the current cautious climate, technologies sporting big price tags and requiring big changes have less hope.

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