Survey: IT spending to rise in 2006

Some of the investment will fund application development and integration, Gartner says.

2 min read
U.S. companies plan to hike their spending on technology by 5.5 percent in 2006, according to a survey released by Gartner on Wednesday.

The thrust of increased technology investments will be on application development and integration, the market research firm said. While spending on security and storage segments will level off in 2006, mobile devices will become a major purchasing priority. Development tools and middleware will also attract investment, the report said. The findings are based on a survey of 1,500 IT managers' plans for next year.

In its forecast for the decade, Forrester Research sees IT spending increasing by 7 percent in 2006 and tapering off in the years to follow.

Gartner said the job market in the IT industry will remain challenging because corporations plan only marginal hikes in their IT budgets and plan to reduce budgets for IT contractors.

"On the surface, these results paint an optimistic picture of long-awaited IT spending recovery, but the increases involved are relatively modest," Barbara Gomolski, research vice president at Gartner, said in a statement. "Many industries will see revenue growth outpace IT budget increases in 2006. As a result, although absolute dollars spent on IT will increase in 2006, IT spending as a percentage of revenue will actually decline in some organizations."

Small and midsize businesses--those with 20 to 99 employees--plan to increase IT budgets by 7 percent in 2006, while larger companies plan smaller increases of 2.4 percent. The service sector should record the largest year-over-year increase, 11 percent in 2006, while growth in financial-sector IT spending may be around 3.4 percent.

"Despite the spending increase, the message to IT managers is clear: You must continue to improve the efficiency of established IT investment areas if you want to fund substantial growth in IT or add IT professionals to the work force," Gomolski noted.