CIOs slash IT spend estimates

IT directors and chief information officers have made "surprisingly sharp" cuts in their spending predictions for this year...

IT directors and chief information officers have made "surprisingly sharp" cuts in their spending predictions for this year according to US financial analyst group Goldman Sachs.

Goldman regularly surveys a panel of 100 IT managers from the top 1,000 US multinationals and said it was shocked by the findings of its latest poll.

The survey, carried out in mid-December, predicted a 1% drop in IT spending in 2003, compared with a compared to predictions of 2% to 3% growth in October, Goldman said.

The change in sentiment was significant, said Goldman, because the latest survey took place after the budgeting season, when corporate financial plans for 2003 were laid out.

When spending does resume, it is likely to grow around 5% per year, according to a weighted-average prediction from the IT managers. As recently as last June, almost half of Goldman's panel thought their long-term IT spending would grow 6% or 7%, but that number fell in the December survey.

Goldman Sachs said IT managers expected increased discounting from hard-pressed vendors and noted "revenue driven profits remain the key to spending improvements".

"Only must-have technologies will get funding in the current environment, " the report noted.

Spending priorities include upgrades of Microsoft's Windows operating system, with investment decisions "partly influenced by support changes" to NT, noted Goldman Sachs.

Security products and wireless LANs will dominate what remains of the Goldman Sachs panel's IT budgets, according to the survey results. New areas of interest include portal software and handheld devices.

Despite the hype behind Linux-based servers, Goldman's panel is losing interest in the technology, although it still ranks them above Windows or Unix-based servers. The group is also moving hardware upgrades down on their priority list.

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