Forrester: IT spending to stabilize in 2002

IT spending by companies is expected to recover this year from its recent downward slide, with IT executives in North American spending 2.3 per cent more on computer hardware, software and services this year than last, according to a study published by Forrester Research Inc.

According to Forrester’s semi-annual Business Technographics North America Benchmark Study, IT spending in consumer services and retail will grow by around 7 per cent this year, the company said in a statement Tuesday.

Forrester’s survey is based on interviews with 1,001 technology executives at North American companies with annual revenue of US$500 million or more, the Cambridge, Mass.-based research company said.

The survey painted a cautiously optimistic outlook on IT spending during the second half of the year, with 19 per cent of the companies surveyed indicating an intention to raise IT budgets by the end of 2002, Forrester said. On the down side, 12 per cent said they plan to cut their IT budgets.

Of those executives who said they will increase their IT budgets, 37 per cent plan to raise them by more than 10 per cent, Forrester said. Fifty-five per cent of respondents described their executives as willing to “spend what it takes” on IT, as compared to 36 per cent who expressed the same sentiment at the beginning of the year, the research company said.

The survey cautioned that mid-market companies, defined as companies with annual revenue below US$1 billion, will not be a growth market for IT vendors this year as those companies are not planning to spend money on IT items other than enterprise resource planning (ERP) software, Forrester said.

The most profitable products in the services market will be “specialized, smaller-scale offerings,” while data dissemination products like portals and business intelligence software will carry the software market, Forrester said.

Last month, International Data Corp. (IDC) issued a slightly more optimistic forecast with a study predicting total worldwide IT spending of US$981 billion in 2002, an overall increase of 3.7 per cent over 2001.

Forrester is at IDC, in Framingham, Mass., is at