PC upgrades delayed again, warns UBS Warburg

IT managers are to cut their IT spend for the third consecutive year, according to a report from financial services company UBS...

IT managers are to cut their IT spend for the third consecutive year, according to a report from financial services company UBS Warburg.

Based on a survey of 50 US and 35 European global corporations, UBS Warburg predicted IT spending would grow by just 4% in 2003.

The report also predicted PC spending will be "relatively weak" in 2003, with corporate upgrade cycles lengthening to five years.

The UBS Warburg report is slightly less gloomy than findings published last week by Goldman Sachs, which claimed that at the end of last year IT directors and chief information officers had suddenly made "surprisingly sharp" cuts in their spending predictions for 2003.

Based on the latest in its surveys of a panel of 100 IT managers from the top 1,000 US multinationals, Goldman predicted IT spending would actually fall by 1% in 2003.

Furthermore, Goldman Sachs said IT managers expected increased discounting from suppliers and "only must-have technologies" - such as upgrades of Microsoft's Windows operating system, security products and wireless LANs - will get funding, with hardware upgrades becoming less of a priority.

Tim Jennings, research director at Butler Group, said that for many companies their hardware and desktop PCs were already sufficiently powerful for their computing requirements. Further hardware upgrades were often seen as unnecessary.

Many IT directors feel that purchases made in the previous "heavy investment cycles" have not yet been fully utilised said Jennings.

"Butler group doesn't feel there'll be any significant pick-up in budgets in 2003 but we expect to a see a modest upturn in 2004," he added.

However, this situation should work to the advantage of IT directors with cash to spend.

"There'll be some good offers around but IT directors need to make sure they apply the pressure. The scope's there but you need to play hardball," said Jennings.

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