Corporate IT spending in Europe has hit bottom – and will stay there until at least the middle of 2003, according to a survey of the spending plans of 415 companies in eight European countries conducted by Gartner Inc.
Next year, around a quarter of those companies expect to increase their IT budgets, with a similar number expecting to cut them. Almost half the companies surveyed expect their IT budgets to remain unchanged, the company said in a statement.
“It’s not good news for the IT industry,” said Steve Prentice, vice-president and director of research for Gartner.
One thing keeping spending down is a requirement from chief financial officers that IT projects show a measurable return on investment, which means companies are shying away from new technologies for which the return on investment is unclear, Prentice said.
“We see a backlog of interesting technologies waiting to be deployed, things like GPRS (General Packet Radio Service) and UMTS (Universal Mobile Telecommunications System),” he said.
Gartner asked IT directors to identify their spending priorities for 2002. Integration and consolidation of existing projects were top on the list for 13.1 per cent of respondents, closely followed by systems architecture and planning for a further 12.62 per cent.
There are signs that IT directors are taking a breather, going back and finishing off projects for which they haven’t yet seen any return on investment, Prentice said.
Vendors looking for “the next big thing” are out of luck: there is no one killer technology on which users are focusing their spending.
“Responses were very diverse,” Prentice said. “There is no specific external focus, not like the year 2000 problem. There is no single enemy.”
Many U.S. IT directors are preoccupied with security, but even that is no big deal for their European counterparts, for whom it is an integral part of the IT infrastructure, not a separate element, Prentice said.
IT directors’ spending plans may not tell the whole story, however: A growing amount of IT spending is falling outside the control of IT departments, as organizations put IT budgets into other business functions, Prentice said. “There’s also IT leakage,” he said, when people spend budget allocated for other things on IT.
In the past, organizations have tended to assume that all spending on IT is necessarily good, but “In the future, people will treat IT expenditure in the same way as everything else, with the same checks and balances,” he said.
To take control of IT spending, Gartner recommends that businesses learn from the way they prepared for Y2K problems, conducting an in-depth audit of their IT resources and needs, and that they avoid hyped technologies with no clear return on investment.
Gartner is still analyzing the results of its IT spending survey, said Prentice. He expects to deliver more detailed findings at Gartner’s Symposium conference in Florence, Italy, from April 8 to 10, 2002.