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IT spending to fall in 2006

The outlook for IT spending in 2006 will be even more sober than 2005's according to a new report by market analyst Forrester.

The firm predicts that European enterprises will raise IT spending by just 1.6% this year, with expected new IT investments hitting a new low, specifically 21% of overall IT budgets.

Forrester attributes a number of reasons for its caution. Firstly, it says that pressure on IT departments to support business goals more efficiently, coupled with an ongoing focus on securing and automating the IT infrastructure, will likely cause companies to further squeeze IT budgets. Forrester believes that firms will prioritise security software applications like antivirus, host intrusion prevention, and Web applications.

Additionally, in the IT services arena, downward price pressure is likely to continue in 2006, as nearly half of firms have set reducing their IT services spending as a critical or important priority.

The report expects the larger technology providers such as Cisco, HP, IBM, Microsoft, Oracle and SAP to dominate vendor purchasing preferences.

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