Forrester: Buying confidence returns

Forrester: Buying confidence returns

FRAMINGHAM (04/02/2004) - IT spending will accelerate in 2004, according to researchers, who predict that confidence in the economy will motivate IT buyers, accustomed to making do with what they have, to invest more.

Forrester Research Inc. this week increased its earlier estimate of 2004 IT spending increases from 4 percent to 5 percent over 2003 levels. Research firm IDC also reached similar conclusions earlier this week.

Forrester estimates IT spending could increase from US$739 billion in 2003 to $776 billion this year and potentially $825 billion in 2005. The spending projections "indicate that companies are taking the wraps off their checkbooks," according to Andrew Bartels, a vice president at Forrester.

The recent report predicted from 2003 to 2004:

* Spending on computers and peripheral equipment will grow from $89 billion in 2003 to $97 billion this year.

* Spending on communications equipment will increase about $1 billion to $106 billion.

* Software purchasing will jump from $181 billion to $195 billion.

* IT services will grow from $94 billion to $97 billion in 2004.

* Outsourcing will increase 9 percent, from $70 billion to $76 billion.

* IT salary and benefits will rise only 2 percent, from $200 billion to about $204 billion in 2004.

A more stable business climate and the potential for a brighter future are driving the positive outlooks, Nicholas Wilkoff, an analyst with Forrester, wrote in a separate report. In a survey of 112 CIOs, more than one-third described their current business climate as strong or very strong, and more than two-thirds said they expect things to improve during the next three quarters.

On the other hand, the same poll showed that many cautious network executives intend to stick to their budget plans for 2004, "perpetuating the trend of doing more with less."

More than half of those polled "expect their IT spending to remain right at budgeted levels" and just about 20 percent expect to spend "somewhat above the budgeted run rate," the report states.

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