Companies which cut IT costs over the past three years
could benefit from discretionary spending increases next year, says
Meta Group.
In a soon-to-be-published report on IT spending across 21
industries, based on responses from 860 IT decision-makers, Meta
has forecast that the insurance and manufacturing sectors will see
double-digit gains in 2004 IT spend.
Companies which have become agile in shedding or adding IT costs
on an as-needed basis will be better positioned to take advantage
of growth opportunities as the US economy starts to rebound, said
Howard Rubin, executive vice president at Meta.
In the insurance industry, said Rubin, "we're seeing companies
moving along at somewhat of a recovery mode and investing in IT for
future growth and to gain a better customer view". Meta Group will
publish its findings later this month.
Rubin added that as orders continue to climb, manufacturing
companies will be investing more heavily in technologies such as
enterprise resource planning packages to help make warehousing and
distribution activities more efficient, while tightening links with
business partners and suppliers.
Some sectors hit hardest by the economic downturn, such as
telecommunications, could also see a big uptick in IT spending next
year. A Gartner report published last month predicted that the
telecommunications sector could see a 25% spike in IT spending in
2004 compared with this year.
The gains are "indicative of a pattern" that has emerged over
the past few years where industries that spend the most on IT "tend
to experience the widest swings in IT spending levels", wrote
Barbara Gomolski, the author of the report.
The Wendover-Global Insight IT Spending Index, a quarterly
report which measures the IT purchasing intentions at 30,000-plus
US companies, ranked telecommunications second behind the wholesale
industry in terms of quarter-to-quarter IT project growth, said
Larry Dillon, president of Wendover.
The group's most recent study, which examined third-quarter IT
spending plans, was released earlier this week and examines IT
purchasing plans over a six- to nine-month period.
Gartner's survey of more than 400 IT executives, conducted over
the summer, projects that manufacturers of industrial equipment
should see their IT budgets jump 27% year on year, while state
governments should see a 32% increase in IT spending in 2004. That
comes after state governments cut technology spending by 18% in
2003 amid declining tax revenues.
Another reason why manufacturing companies might see a boost in
2004 IT spending is "the fact that they haven't spent anything (on
discretionary projects) for the past two and a half years",said
John Parkinson, chief technologist for the Americas at Cap Gemini
Ernst & Young.
Parkinson said many manufacturers are analysing whether to
"replatform" to Microsoft Windows NT or Linux to replace IBM's
AS/400 midrange systems with dwindling third-party application
support.
Then there are companies whose IT spending cuts across the
grain. Meta and Gartner are forecasting a drop in IT outlays in the
transportation industry - 3% and 12% respectively.
Thomas Hoffman writes for Computerworld