25 February 2003 The vast majority of CEOs and CIOs believe that the IT spending freeze is over, according to a major survey of IT decision-makers by analysts IDC.
IDC canvassed 1,000 executives across 12 countries in Europe, the US and Asia. It found that 85% of CEOs and CIOs expect to increase or maintain their IT spending levels in 2003.
The findings are backed by the latest data from the Infoconomy Global Index. The Index, which tracks the growth rates of the 200 largest IT companies, improved to -0.6% in February, up from -1.4% a month earlier, indicating that the IT industry will be out of recession by March or April.
The Infoconomy Global Index will be published in the forthcoming March 2003 issue of Information Age.
The IDC survey shows that CEOs are more optimistic than their CIO counterparts on the levels of IT spending increases expected this year. While CIOs look to competitive pressures and changing business needs as triggers for budget increases, CEOs remain focused on the bottom line and the wider economic outlook, says IDC.
Initially, spending will be focused on infrastructure, rather than major new software projects. “Routine infrastructure upgrades will dominate short-term budget priorities, taking up almost half of all spending in 2003,” said Stephen Minton, an analyst at IDC.
“This isn’t surprising, given a lot of companies have spent very little during the past two years on the technology which is already core to running their business.” This pent up demand is expected to first increase sales of storage hardware, PCs and network equipment, says IDC.
However, any optimism comes with a caveat: budgets could again be scaled back if there is any deterioration in economic stability and profit levels. The survey also pointed to another key business trend: almost a third of business IT spending now originates outside of the traditional IT department.