US IT spending to stabilise

US IT spending to stabilise

IT spending by US companies is expected to recover this year from its recent downward slide, with IT executives in North America spending 2.3 per cent more on computer hardware, software and services this year than last, according to a study published by Forrester Research.

According to Forrester's biannual Business Technographics North America Benchmark Study, IT spending in consumer services and retail will grow by around 7 per cent this year.

Forrester's survey is based on interviews with 1,001 technology executives at North American companies with annual revenue of $US500 million or more.

The survey painted a cautiously optimistic outlook on IT spending during the second half of the year, with 19 per cent of the companies surveyed indicating an intention to raise IT budgets by the end of 2002, Forrester said. On the down side, 12 per cent said they plan to cut their IT budgets.

Of those executives who said they will increase their IT budgets, 37 per cent plan to raise them by more than 10 per cent, Forrester said. Fifty-five per cent of respondents described their executives as willing to "spend what it takes" on IT, compared to 36 per cent who expressed the same sentiment at the beginning of the year, the research company said.

The survey cautioned that mid-market companies, defined as companies with annual revenue below $US1 billion, will not be a growth market for IT vendors this year as those companies are not planning to spend money on IT items other than ERP (enterprise resource planning) software, Forrester said.

The most profitable products in the services market will be "specialised, smaller-scale offerings", while data dissemination products like portals and business intelligence software will carry the software market, Forrester said.

Last month, IDC issued a slightly more optimistic forecast with a study predicting total worldwide IT spending of $US981 billion in 2002, an overall increase of 3.7 per cent over 2001. According to IDC, IT spending in the US is expected to increase by 3 per cent this year to $436 billion, with further growth of 9 per cent in 2003.

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