Survey Shows No IT Spending Upturn in Sight

Although IT spending is no longer in free-fall, expectations for a real improvement are

premature, according to a survey of Fortune 1000 IT managers.

IT spending in 2003 remains flat with no sign of an upturn, notes a report from investment

company Goldman Sachs, which polled 100 IT managers in mid-February. The report adds that

while some key spending indicators were stable, the majority of them continued their recent

decline.

The survey found that many executives expect IT spending to increase 1 percent this year —

below the 2 percent or 3 percent increase that had been hoped for. While not a big increase

by any means, industry watchers are breathing a sigh of relief after last year’s dismal

numbers.

And the majority of managers polled think things will get worse before they get better.

”Over 70% of our IT managers believe that incremental budget tightening by management is

more likely than budget loosening over the next three to six months,” wrote the Goldman

Sachs analysts in the report. And half of those polled so they re-examine their tech budgets

every 30 days.

The technology industry has been suffering for the past two years, with the economic

slowdown and corporate scandals fueling the problem. The bursting of the Internet bubble and

the demise of a huge chunk of online companies didn’t help the technology situation any

either — hurting investor’s faith in all things technology.

But, surprisingly, the current world tensions and the looming threat of the U.S. going to

war with Iraq doesn’t appear to be hurting the industry as much as some analysts suspected

it would.

”Only 19 percent of our respondents believe an easing or resolution of current geopolitical

tensions will help to spur IT spending,” reports Goldman Sachs analysts. ”Although this

proportion is not inconsequential, it seems clear that the impact of political conflict

overseas is only a factor on the margin.”

When asked what technology categories would make their purchase priority list, IT managers

rated security software, wireless LAN and storage networking at the top of the heap. CRM

software, Voice-over-IP equipment and storage management software all showed an increase in

spending importance.