- Unlike the post-Gulf War recession, when the promise of client/server computing helped spur new IT investments, there are no must-have technologies on the horizon likely to stimulate spending this year, eight IT managers and analysts say.
"I don't see any technology out there that's causing companies to open up their wallets," says Howard Rubin, executive vice president at Meta Group in Stamford, Connecticut. Indeed, Meta Group is taking a rather dim view of IT spending, projecting a worldwide contraction of 3% to 5% this year compared with 2002.
That's only slightly more pessimistic than forecasts by other IT consulting and market research firms. Forrester Research in Cambridge, Massachusetts, is pegging IT spending growth at just 1% this year, whereas IDC in Framingham, Massachusetts, expects an increase of 2% to 5%. Stamford-based Gartner was the most optimistic, predicting a 7% gain.
In addition, Merrill Lynch & Co says that 62 out of 100 CIOs it surveyed in November indicated that their companies are trying to reduce IT spending as a percentage of total revenue. The 75 US and 25 European companies currently devote an average of 5% of their revenues to IT, Merrill Lynch said. Only 22 respondents plan to increase IT spending-to-revenue ratios this year.
New technologies such as web services aren't likely to lead to a widespread lift in IT spending this year, says John Puckett, former vice president and general manager of wireless and internet technologies at Polaroid.
"Any gains in spending will be the result of an improving economy and a rise in corporate profits," says Puckett, who is now an independent consultant in Foxboro, Massachusetts. He expects whatever level of new investments are made this year to address "pain thresholds," such as IT infrastructure projects aimed at reducing costs or improving service levels for end users.
Still, analysts and IT managers did identify a few technology areas that could have increases in spending. For example, the scheduled end this year of Microsoft's support for Windows 98 and NT 4.0 will require many companies to upgrade desktop systems, says John Jordan, a principal at Paris-based Cap Gemini Ernst & Young.
Security concerns may also help IT spending, says Roy Swackhamer, CIO at CNF in Portland, Oregon, a $US4.9 billion company that transports freight and manages supply chain networks for customers. "I recently read that attacks on corporate networks are up 20% this year, and I see it in our statistics as well," he says.
Swackhamer says he expects to see a general increase in investments for IT disaster recovery planning and customer-facing applications. But overall IT spending gains likely will be kept to a minimum "until the economy begins to move again," he says.
Christopher T Wolff, vice president of architecture and standards at The Thomson Corporation in Eagan, Minnesota, thinks that companies "are beginning to see the second wave of the internet" for business uses. Nevertheless, Wolff says he doesn't expect to see any significant bumps in IT spending "until corporate profits can turn around to pay for those technologies."