Forrester paints darker IT picture

Forrester Research is trimming its technology spending outlook for the year, saying the manufacturing and high-tech sectors are reining in expenditures.

In a report released Tuesday, the research firm predicted that North American technology spending will grow just 1.3 percent in 2003, down from the 1.9 percent it forecast in a similar March survey of executives.

Cutbacks by manufacturing and technology companies led to the downward revision, Forrester analyst Tom Pohlmann said. About one in three technology and manufacturing companies surveyed in April and May planned to spend less than it originally budgeted for information technology. "At the beginning of 2003, both industries planned for above-average budget growth. Now both are more likely than others to pull back on the reins," Pohlmann wrote in the report.

Spending on IT by consumer companies, on the other hand, is expected to be more in line with earlier forecasts. Just 11 percent of consumer services companies and 13 percent of consumer products companies expected to spend less than budgeted. A vast majority said spending would be in line with earlier plans.

IT services are showing some hope, according to Forrester. Eleven percent of companies surveyed intend to spend more than they originally budgeted on services. The report predicted resurgence in focused areas such as IT strategy consulting, architecture planning and Web site design.

Still, even buyers who plan to increase spending significantly are likely to be picky during an uncertain economy. In the earlier Forrester report, "Benchmark North America: Business Technographics Data Overview," more than a third of the companies surveyed said business unit leaders outside of IT were "very involved" in purchasing decisions. An earlier survey by IDC also forecast modest growth and found that IT buyers were scrutinizing purchases much more closely than in years past.

Both IDC and Forrester have been more optimistic about IT spending than Goldman Sachs, which envisages a 1 percent decline in overall spending this year.