Enterprises lower IT spend estimates

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Companies and organisations with more than £500 million in revenue have lowered their IT spending forecasts for 2007 to 2.8 per cent, according to a new Gartner report.

Figures from the analysts' Worldwide IT Benchmark Report showed that spending estimates are down from research collected by Gartner during the first half of 2006. At that time, IT spending for 2007 was forecast to grow at 6 per cent.

"A number of factors have combined to force enterprises to lower their IT spending forecasts from the first half of 2006," said Jed Rubin, director, Gartner Consulting. "Looking back at the distribution of spending in 2006, enterprises spent more to support core business operations. This includes spending to support increasingly complex infrastructure and applications requirements, rising energy costs, regulatory requirements and other non-discretionary spending to keep the business running."

He said that this increased "run the business" spending has consumed budget resources that were originally earmarked for more strategic and transformational investment. IT leaders are now planning to optimize their spending in these areas in the year to come.

According to the report, growth and transformation remain top priorities for enterprises next year, but any new investments need to be funded by a significant reduction in existing 'run-the-business' spending. To support these priorities, IT organizations will subsequently need to reduce their 'run the business' budgets by nearly five per cent in 2007.

The research shows that IT spending forecasts differ by industry. In 2007, the most significant difference in IT spending growth will be in the Media industry, up to nearly 7 per cent from 4 per cent in 2006 (see table 1). The consumer products industry will see the biggest decline in IT spending in 2007, as spending is expected to fall by nearly 6 per cent, down from an 8 per cent increase this year.

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