Continue in 2 seconds

IT Spending Projections Rise Significantly in April

Published
  • June 04 2004, 1:00am EDT

The May CIO Magazine Tech Poll reports that IT spending projections rose to their second highest number in three years. The expected 7.8 percent increase was the highest since 8.2 percent in January of 2004. In addition, the poll reports the number of respondents receiving salary increases over the past 12 months was higher than at any point in 2003. Technology spending projections also remain consistent for the fifth consecutive month.

"Although numerous economic cross currents persist," says George Elling, managing director, Enterprise and PC Hardware Research for Deutsche Bank Securities. "CIO's continue to project a favorable IT spending outlook for the coming months."

"This month's poll indicates that the recovery is spreading across a wide range of technologies," says Gary Beach, Group Publisher of CIO magazine. "The fact that compared to a year ago, spending projections have doubled and that we are now seeing strong spending among the larger companies shows that this recovery is here to stay. Equally encouraging, for the overall economic picture, was the tightening in labor markets, indicative of future wage growth and more hiring, most notably among large companies."

"During May, 43.8 percent of our respondents said they planned to increase spending over the next 12 months on eight unique categories," says Dr. Ed Yardeni, chief investment strategist for Prudential Equity Group. "In April, it was 45.1 percent, the best reading since early 2001, suggesting that a slow but steady IT expansion is in progress."

The CIO Magazine Tech Poll provides technology and business executives, economists and policymakers with a tool to gauge technology growth trends and to assess their impact on the overall economy. The poll panelists are asked to answer questions on overall current and projected IT budgets on a monthly basis. Also covered are future spending plans for IT hardware, software, services, and Internet initiatives. The results of May's poll, conducted from May 6-13, are detailed below.

During May 2004, the CIO Magazine Tech Poll panel projected IT budgets to grow by 7.8 percent over the next 12 months, higher than April levels of 6.6 percent. In addition, the panel reports IT budgets increased by an average of 5.2 percent over the previous 12 months, higher than 4.3 percent reported in the April poll.(2)

When asked about spending in eight specific IT categories, the average number of panelists planning to increase spending decreased to 43.8 percent in May (from 45.1 percent in April). Those planning to decrease spending decreased to 11.9 percent (from 13.2 percent in April)(3). Security software continues to be the strongest sector in the poll with roughly 57.7 percent of respondents planning to increase spending (a decrease from 59.9 percent in April) while only 2.6 percent plan to decrease spending (roughly flat with April).

Computer Hardware. The outlook for Computer Hardware spending increased slightly month-to-month. Among the panelists, 53.2 percent plan to spend more, up from 53.0 percent in April, while 13.8 percent plan to cut spending, down significantly from 16.5 percent of panelists in April.

Infrastructure Software. The percentage of CIOs planning to increase spending on infrastructure software was 36.5 percent in May, a decrease from 39.5 percent in April. Those planning to decrease spending fell to 9.0 percent  in May from 11.2 percent in April.

Compensation Costs and Labor Market Conditions. IT compensation costs (including salaries, benefits, and bonuses excluding stock options) reportedly rose by an average of 4.1 percent in the 12 months ending in May, down slightly from 4.4 percent in April, and up significantly from 1.9 percent a year ago. Six-point seven percent (6.7 percent) of respondents report IT professionals were hard to find and retain, up from 4.9 percent last month and up from 3.4 percent a year ago.

Internet Revenues. Overall, panelists expect to generate 11.1 percent of their revenues from Internet activity (B2B2C) over the next 12 months, compared to 8.9 percent during the previous 12 months. This is flat from last month's levels.

Internet Purchases. On average, during the next 12 months, panelists expect to purchase 20.6 percent of their materials, supplies and parts over the Internet, up from an estimated 16.8 percent over the past 12 months.

  (1) The TFGI is calculated by multiplying the projected growth rate of future IT budgets by the average percentage of respondents saying they plan to increase spending on eight unique categories: computer hardware, data networking equipment, telecom equipment, storage systems, outsourced IT services, infrastructure software and e-business software.

 (2) Averages exclude responses over 100 percent.

 (3) Starting in January 2002, Security Software has been added to the group of IT sectors surveyed in the Poll.

Source: CIO Magazine

 

 

Register or login for access to this item and much more

All Information Management content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access