More European chief information officers plan to increase their IT
spending next year rather than cut it, according to figures from
analyst firm Gartner.
Gartner is predicting total European IT spending will grow faster
next year than this, but Peter Sondergaard, Gartner's head of
European research, warned that organisations need to change the way
this money is spent.
In future, cost optimisation, not cost cutting, should be key to
corporate IT strategy, according to Sondergaard.
"In the past year and a half, they had these knee-jerk reactions to
cost-cutting, with no reference to optimisation, to whether they
were eliminating the cost that delivered the least business value,"
he said.
If you think you've heard the "spend smarter" rhetoric before,
you're right, said Sondergaard, adding that this time, it was
serious. "People talked about this three years ago, but then there
was money in abundance," he said. "It's a completely new
environment now."
Around one in three of the chief information officers of
medium-sized and large European companies questioned by Gartner
plan to increase their IT spending by more than 3% in 2003, while
around one in five plan to cut spending by at least 3%.
One in ten expect to spend more than 10% more next year, and about
one in 11 expect to cut spending by more than 10%, according to
figures supplied by the research firm.
"One of the positive impacts during the e-business bubble was that
CIOs became members of the board," Sondergaard said. This new
status, he said, gave them a much clearer view of their
organisation's spending needs in the economic downturn.
Gartner questioned the 1,500 CIO members of its European Executive
Program, and compiled the figures from a statistically
representative group of 336 respondents.
The most optimistic CIOs are to be found in Italy, with 46% of
respondents there planning to increase spending in 2003 by more
than 3%, followed by the UK and Ireland (37.7%).
Another Gartner study, compiled by its Dataquest unit, forecasts
overall IT spending in Europe will increase by 5.4% next year,
compared with 1.7% this year. Growth will be strongest in software
(6.4%) and services (7.1%), with no growth expected in hardware
sales.
This pattern is a symptom of the trend towards cost optimisation
rather than cost cutting, according to Sondergaard. "In 2003, the
replacement cycle may see software replace hardware," he
said.
Sondergaard foresees an increase in spending on middleware.
"There's a tremendous focus on improving your enterprise
architecture, and vendors that operate in the middleware space up
to the border of the packaged application layer will do relatively
well," he said.
CIOs are likely to have fewer suppliers to choose from in the
middleware-to-application layer market, although they will offer a
broader range of products, Sondergaard added.