CIOs Confident About IT 05 Outlook

Forrester Research says that CIOs are enjoying a boost in their confidence level
in the IT industry. The results are part of Forrester’s quarterly CIO Confidence poll
of 195 North American CIOs.

Fifteen percent of the respondents believe the
current business climate for their industry is “Very Strong.” This is an increase from
the first quarter results, which found only 4 percent of those polled considered
IT very strong.

Concerning future growth, 71 percent of those
surveyed expect better business performance within three quarters from now, compared to
5 percent who anticipate a decline.

The increase in CIO confidence is spurring an increase in IT
spending. According to Forrester, 66 percent plan to increase
their IT budgets in 2005, with an average planned budget increase of 6.4 percent.
Overall North American IT spending will grow at a
restrained pace of 7 percent in 2005 and is expected to continue at
roughly the same clip until 2008.

Forrester also revealed some of its growth estimates for the next four
years based upon its own proprietary forecasting models. The research
firm believes that the spread of Linux and open source software, as well as
the adoption of blade servers and improved performance, will drive near
term growth in the computer hardware market, which should plateau at 9
percent, peaking in 2005 at 14 percent.

Network equipment, a big winner this year with an expected growth rate
of 16 percent, will slow dramatically in 2005, with only a 4 percent spurt.
IT consulting and integration is expected to grow by only 3 percent in 2005.
Software spending will also grow at 3 percent in 2005, though
Forrester expects it to “eventually recover,” enjoying a growth rate of 7 percent.
Spending on Web services is expected to be the reason for the increase in software
spending is expected to come from Web Services
and associated SOAs once they become more mainstream, which is expected by 2006.

Just last week, Merrill Lynch
tepidly endorsed
IT’s outlook, calling it the most attractive technology sector “among a set of poor choices.”

In June, Gartner Group reported
that the global IT services market expanded by 6.2 percent last
year.

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