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Update: Studies diverge on IT spending in 2003

By David Legard and Tom Krazit, IDG News Service
January 3, 2003 12:00 PM ET

IDG News Service - Two studies released yesterday portray divergent views of where IT spending is headed in 2003.
Research by market analysis company Aberdeen Group Inc. predicted that worldwide IT spending will grow 4% this year, rebounding from growth of just 1% in 2002, according to
That level of growth will continue through 2006, with little chance of a return to the double-figure percentage growth rates of the late 1990s, the company said in its report.
But a separate study showed a decrease in IT spending for 2003.
The Goldman Sachs Group Inc., in a report also released yesterday, predicted a 1% drop in IT spending in 2003, contrasting with other more optimistic predictions from technology analyst firms.
Goldman regularly surveys a panel of 100 IT managers who influence technology decisions at top companies worldwide. The most recent results show a mixed spectrum of expectations for the coming year. The number of managers expecting declines in their IT spending increased to 37% in December, as opposed to 23% who felt that way in October. A weighted average of all respondents indicated a 1% drop in IT spending, compared to a weighted-average prediction of 2% to 3% growth in October, Goldman said.
The magnitude of the pessimism surprised the New York firm, which said a 3% swing in the outlook from October to December was unusual.
And the gloom won't lift for awhile, at least according to Goldman's survey. It will take at least a year for IT spending increases to accelerate, according to 43% of Goldman's panel. And 63% of the respondents said only as their company's revenue and profitability increase will they be able to reinvest some of the profits in IT.
When spending does resume, it will likely grow about 5% per year, according to a weighted-average prediction from the IT managers. As recently as last June, almost half of Goldman's panel thought their long-term IT spending would grow 6% or 7%, but that number fell in the December survey.
Security products and wireless LANs will dominate what remains of the Goldman panel's IT budgets, according to the survey results. Other priorities include enterprise portal software and upgrades of Windows operating systems from Microsoft Corp., Goldman said.
Despite the hype behind Linux-based servers, Goldman's panel is losing interest in the technology, although it still ranks them above Windows or Unix-based servers. The group is also moving hardware upgrades down on their priority list.
According to the Aberdeen research, at the moment, there are no compelling reasons for user organizations to spend heavily on technology -- whether on new technology or on upgrades

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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