Survey: 2003 IT spending to remain flat

Survey: 2003 IT spending to remain flat

A survey of top IT executives at large companies paints a sombre picture for growth in corporate IT spending in 2003 and in years to come.

Expectations for IT spending growth this year are below the timid forecast issued in late 2002, according to the survey that was conducted in mid-February by the research unit of The Goldman Sachs Group investment bank.

Even more concerning is that respondents' definitions of what their annual IT spending growth will be under normal circumstances in the long term dropped to an all-time low.

The poll of 100 IT decision-makers shows respondents expect an average increase in IT spending of 1 per cent in 2003, down from an average expectation of between 2 per cent and 3 per cent in late 2002, Goldman Sachs said.

When asked what they consider will be their "normal" long-term annual IT spending growth rate, respondents answered with historically low estimates.

The average expectation was a growth rate of 4.3 per cent, well below average expectations of between 6 per cent and 7 per cent throughout 2002, Goldman Sachs said.

Respondents included 51 chief information officers, 27 IT directors and 15 IT vice presidents (15) from the world's largest 1,000 companies, the company said.

Another bleak finding was that 48 respondents now expected an acceleration in their IT spending to come in 2004 or later, up from 43 respondents in the December survey, and an indication that "spending recovery gets pushed out further beyond the near-term horizon," Goldman Sachs said.

Those that expected an acceleration to happen this year dropped to 27 from 36 in the December survey.

It was also clear from the survey that the most important factor for increasing IT spending was an improvement in revenue growth, followed by upper-management conviction that IT investments would lead to increased profits, Goldman Sachs said.

Concerns over global political issues were cited by only 19 respondents. Moreover, the survey found that technology innovations increasingly carried less weight in terms of influencing IT spending decisions.

"When IT managers consider technologies, they remain focused on those with a proven ROI (return on investment) or that can cut costs or lift bottom-line results," the report said. "Moreover, even the newest compelling technologies are not enough to separate dollars from IT managers."

Finally, the Linux operating system experienced "a significant increase in interest ... in the enterprise" since October 2002, as IT executives continued to be attracted by Linux's price/performance in hardware based on Intel chips, Goldman Sachs said.

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