No growth in spending until 2004, says Goldman Sachs
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There will be no upturn in the IT industry in 2003, according to the latest IT spending survey from Goldman Sachs.
3 January 2003 An upturn in IT spending - predicted by several analysts for 2003 - is further off than expected, according to the latest survey of IT budgets from investment bank Goldman Sachs.
Two-thirds of companies surveyed said that budget cuts were more likely than budget increases during 2003. Overall, Goldman concludes that IT spending during 2003 will decline by 1%. Spending is not likely to grow again until 2004, according to Goldman.
This contradicts earlier forecasts from a number of analyst groups, including Goldman itself, which had predicted a 2% to 3% rise in technology spending for 2003.
In a similar vein, Gartner predicted in November 2002 that IT spending for 2003 would grow by between 3% and 4%. Meanwhile, IDC said it expected a 4% rise in software spending by companies looking to improve efficiency across various business processes.
But Goldman's negative forecast suggest that the downturn in IT spending is set to continue, despite radical price cutting by many vendors. More than half (56%) of the respondents to Goldman's survey said that, in their experience, discounting was becoming increasingly widespread, enabling many companies to get for less money from their IT suppliers.
As a result, many technology companies could end up missing their earnings targets for the current quarter, says Goldman.
Many organisations have cut back on IT investment due to the overall sense of economic uncertainty. However, Goldman points out that there has also been a lack of what it calls 'game changing' technologies, which tend to encourage increased investment.
* The January 2003 edition of Information Age will take a close look at how prices are falling across the IT industry and how organisations can take advantage. For a free trial subscription to Information Age, please click here.
