IT budget boosts seen in 2004

Improved corporate revenue and pent-up demand for long-delayed technology projects are expected to contribute to a 3 to 5 per cent increase in overall IT spending next year, according to several industry researchers.

And as IT managers enter the final stages of negotiating their 2004 technology budgets with CEOs and other business executives, initiatives such as security, Web services and customer relationship management (CRM) are expected to benefit.

However, there isn't unanimity on the likelihood of a rise in IT investments next year, judging by comments by IT professionals and industry analysts.

For example, Gartner, IDC and Alinean LLC are all forecasting small spending increases.

But Meta Group said it expected IT outlays in 2004 to remain flat with this year's spending level.

On average, IT spending would amount to about 3 per cent of corporate revenue next year, predicted Meta. That's down from the boom years of the dotcom era.

Meta's executive vice-president, Howard Rubin, said that IT spending as a percentage of revenue was even lower before the boom helped fatten those figures.

"Companies are finding they can run their operations at a lower level (of spending)," he said. "It's almost like a market correction."

But the spending cutbacks made by many companies during the past few years could eventually have a whiplash effect on IT departments, president and CEO of Alinean, Tom Pisello, said.

Corporate business units had resorted to creating "shadow" IT departments to launch pet projects that had been stalled by IT budget cuts, Pisello said.

Eventually, IT managers could become responsible for maintaining the systems installed by business units, he said.

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