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Euro IT spending expected to rise

Companies looking for solutions to the millennium bug will boost the European market this year.

As the millennium bug looms, the European information systems market is expected to increase its spending as solutions are sought with increasing panic.

A study released by International Data Corporation expects the market to benefit from "a great deal of extra spending on these problems, which may continue throughout the year. Existing information technology budgets are being exhausted, and additional cash from other areas is being shifted, to deal with problems associated with the year 2000 changeover.

The problem is this: Many computer systems only use the last two numbers of the year, such as 97, instead of 1997. So when 00 comes up for the year 2000, computers will view it as 1900 instead.

Patches and upgrades to new systems are fine for businesses with packaged software, but for much of the custom software on mainframes, diagnoses and solutions will prove much more troublesome and costly.

"In a substantial amount of cases we are seeing a hastening of the upgrade cycle to become date- and currency-compliant, rather than looking for patches to cover existing architectures," IDC's Andrew Doyle wrote in the report. That sort of makeover solution could cost a lot more than tweaking existing systems, thereby strain existing budgets.

Some believe that a shortage of resources could mean that many companies won't be able to afford to solve the problems, an expert on the issue said at a millennium bug seminar at Sydney's Opera House in June.

"There won't be enough resources," said Nick Montague, managing principal at HDS, a computer solution unit of Hitachi. "The feeling in the market is that the requirement for resources will be four times greater than the provision."

Improvements in the European economy will be another factor in sustaining steady growth for the year, the report said. A momentary economic slowdown in 1996 has led to a modest rebound this year, the report stated.

Western European information technology business will be worth $197 billion this year, about 29 percent of the world market, according to IDC.

The Italian market is expected to encounter the smallest growth, as economic conditions such as high taxes and the ailing fortunes of domestic company Olivetti continue to weaken market growth. At the other end of the scale, the Greek market continues to boom, with a 15.8 percent forecast for this year.

Of the major European markets--the United Kingdom, France, and Germany--British sales will be the strongest, at 9.2 percent. That will be fueled by strong economic conditions surrounding the arrival of the new government, according to the report.

Reuters contributed to this report.