IT spending among European companies will rise by only 1.6% in 2006, according to Forrester Research. That represents a sharp fall in budgets from the 2.9% growth rate the analyst group calculated for 2005.
Its survey of 506 European enterprises found that only 21% of IT budgets will be targeted at new technology investments, a figure Forrester describes as “a new low”. Security software applications, such as anti-virus tools, host intrusion prevention and web applications, will dominate that spending.
The reason for the spending squeeze is not a poor financial outlook; nearly 60% of respondent companies said that their coming year would be either very good or OK for their industries. Instead, says Forrester Research, the budget freeze reflects “pressure on IT departments to support business goals more efficiently.”
The survey also found that almost 50% of firms interviewed see the reduction of spending on IT services as a “critical or important priority”. This is likely to force prices down in the services market.
There were no surprises among the respondents’ preferred suppliers for next year; Microsoft, HP, Cisco, SAP and Oracle look set to receive the lion”s share of the reduced budgets.