IT budgets may get fatter

26 Feb 2003 08:58

An IDC survey says 85 percent of companies plan to increase or maintain their spending on IT spending this year, offering a glimmer of hope to the industry

After months of keeping a tight grip on the purse strings, companies are ready to start spending on information technology again -- but with a close eye on the bottom line, says a new survey.

An IDC study released on Tuesday found 85 percent of companies plan to increase or maintain their IT spending this year, but such spending will remain under constant review.

The global survey of nearly 1,000 chief executives and chief information officers offers a glimmer of hope for the struggling IT industry, and presents a more optimistic outlook than the 1 percent year-over-year decline forecasted last month by Goldman Sachs.

"Routine infrastructure upgrades will dominate short-term budget priorities, taking up almost half of all spending in 2003," said Stephen Minton, IDC Worldwide IT Markets program director, in a statement. "This isn't surprising, given that a lot of companies have spent very little during the past two years on the technology which is already core to running their business."

The survey also found chief executives were more optimistic about making IT spending increases this year, compared with their chief information officers. And these days, chief executives and other department heads are playing an increasing role in making IT spending decisions.

Nearly one-third of technology spending now comes from areas outside a company's IT department, IDC's researchers found. That shift has come about as chief executives rein in the past practice of virtually leaving an open checkbook for their chief information officers to make IT spending decisions, and as department managers, who are accountable for the profit performance of their unit, are also getting active in the process.

Even though chief executives and chief informaiton officers said they anticipate stable or increasing IT budgets, they also said this optimism is subject to change based on economic shifts and the performance of their own company's financial results.

"Just as IT spending was severely disrupted in 2002 by wild card factors -- including WorldCom and Iraq -- so it is that the outlook for 2003 remains clouded by similar uncertainty," Minton said.

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