IT buyers tapping the brakes

IT buyers tapping the brakes

IT budgets are under pressure and falling as a proportion of companies' revenues and expenses

Expectations for technology investments in 2007 continue to fall among IT executives planning their future budgets, according to the latest Goldman Sachs survey.

Among the 100 IT decision makers at Fortune 1000 companies, some 27 per cent say their IT budgets are under pressure and falling as a proportion of the respective companies' revenues and expenses. More than two-thirds reported their IT budget was keeping pace with company revenues and just 8 per cent said IT budgets were growing faster than their overall business and was expanding in proportion to revenues and expenses.

The findings released this week show that about one-third of IT buyers are moderately tightening their budgets to align with business objectives. Goldman Sachs expects overall spending in 2007 to increase at the low end of the 6 per cent to 7 per cent range the firm predicted late last year.

"Our latest survey does little to change our view of moderately decelerating IT spending growth for 2007," the January report reads.

As for spending intentions going forward, about 70 per cent report their IT investments will be similar to those in recent years, 16 per cent predict it to be greater and 13 per cent expect it to be less than in recent years. The top three priorities for investment are application integration, security and cost cutting, with business intelligence and ERP rounding out the top five. The survey also found IT initiatives around VOIP, server virtualisation and open source ranking at 11, 17 and 32 among survey respondents.

"Low spending priorities include areas with a high degree of buzz such as utility/grid/on-demand computing (ranked 30) and software-as-a-service (31), suggesting that mainstream adoption of these technologies remains nascent. Open source also remains a low spending priority suggesting that general open source momentum in the enterprise likely has slowed," the report concluded.

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