IT spending to rebound in

By Thomas Hoffman

After two consecutive years of declines in IT spending, most enterprises will see a modest recovery in technology outlays by 2004, according to research released by Gartner Inc. at its IT Asset Management and Total Cost of Ownership Summit in Los Angeles.

“No industry will experience double-digit growth in IT spending through 2006 – if ever again,” said Barbara Gomolski, an analyst at the Stamford, Conn.-based research firm.

However, when looking at IT budgets as a percentage of corporate revenues, companies in process manufacturing, services and petroleum have seen increases in their 2003 IT budgets compared with last year, said Gomolski.

Meanwhile, most organizations in the insurance, retail and IT industries saw their IT budgets shrink using the same benchmark. For instance, IT budgets in the retail sector are down 4.2 per cent this year, while tech spending among IT vendors is down a whopping 17.2 per cent, according to Gartner.

Gartner, which based its figures on surveys it conducted with roughly 500 clients last October, combined with some recent updates, estimates that the average company allots roughly 70 per cent of its IT budget to “lights-on” or day-to-day operations such as data centre activities and software licenses.

Another 22 per cent of IT budgets is typically set aside for capital spending, said Gomolski. That leaves roughly 8 per cent of IT spending that goes to “hidden” costs or business unit/IS-related expenses.