IT Spending Still Sluggish as ’03 Draws to a Close

IT managers are remaining cautious about spending as the year draws to a close, according to

a new study.

Despite some signs of economic recovery, a study by Gartner, Inc., a major industry analyst,

shows that companies in the public and private sectors are still hesitant about IT spending.

In November, executives at small, medium and large businesses all reported that they are

spending below their budgeted levels.

In the Gartner Technology Demand Index a score of 100 means the company spent exactly what

was budgeted for the month. The index rating for November came in at 81, slightly below the

85 value that was scored in October.

”Thus far, fourth quarter spending does not show the strength needed to suggest a

broad-based recovery across all categories of IT spending in early 2004,” says David

Hankin, senior vice president and general manager at Gartner. ”Spending may surge toward

the end of December if IT decision makers commit remaining funds in 2003 budgets before the

close of their fiscal year, but such an increase should not be considered an indicator of

recovery early in 2004.”

Gartner analysts note that 49 percent of those surveyed say their fiscal year ends in

December. And 67 percent of those companies report that any budget money not spent by the

end of 2003 will be lost. Only 30 percent say they can carry unspent money over into the new

year.

Analysts also noted that while all technology sectors suffered a decline in spending, the IT

services segment suffered the most, dropping to an index rating of 79 last month.

”Coming from a strong position earlier in the year, IT services has seen an erosion in both

current spending and in projected spending in 2004,” says Hankin. ”We believe that much of

the shortfall is the result of competitive pricing among vendors and new outsourcing options

that have put considerable pressure on domestic service providers in North America.”

News Around the Web