Last year, IT managers and business executives told Gartner Group
they planned to spend 8% more on technology and IT services in
2001. However, their actual IT spending only increased by 2.5%.
Asked at Gartner's Symposium/ITxpo 2001 in October how they planned
to spend for 2002, IT managers estimated they would spend 1.5% more
than they had this year.
But the economic downturn has pushed many companies into survival
mode, conserving cash until the markets recover, rather than
investing in new technologies. Gartner forecasts that IT spending
will increase in only a few areas, including storage, security,
development of Web services, and personal digital assistants
(PDAs).
About 59% of respondents reported underspending against their
full-year budgets through the end of September, according to the
survey of 1,048 delegates. The survey, conducted in conjunction
with SoundView Technology Group, polled IT professionals mostly
from the financial services industry, manufacturing, utilities,
health care and the media.
Top-level management reporting directly to corporate officers
tended to forecast their company's IT spending a little higher than
those who reported to division or department chiefs, according to
the report.
But some industries, such as providers of IT outsourced services,
will see declines in IT spending, according to the survey.
Corporate customers may squeeze their IT services providers for
better prices, eating into margins. Providers of IT services, such
as data centre outsourcing companies, have thin margins already and
few costs to cut. Job cuts and wage deterioration are on the
horizon in this area, warned Al Case, senior vice president at
Gartner.
On the other hand, the survey did not predict massive lay-offs of
IT personnel. IT professionals who understood how to integrate the
Internet into their businesses would still have jobs waiting for
them.
Case identified Web services as one potential growth area. "Those
particular kinds of services have labour-saving or market-expanding
potential for companies," he said.
Spending on data storage to accommodate the ever-increasing
archives of accumulating company information will also increase, as
will spending on security.
Part of the increased emphasis on security and storage spending
comes from the 11 September terrorist attacks and the current focus
on disaster recovery and defence, Case said. The symposium was the
first large gathering of IT professionals held by Gartner since the
11 September terrorist attacks.
Companies surveyed spent roughly three-times as much on capital
expenditures in support of current operations as they did on new IT
initiatives, a ratio that did not change from last year even as
companies began cutting back on IT spending.