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Study: IT spending looking better

Forrester Research raises its forecast for 2004 U.S. IT spending growth from 4 percent to 5 percent. But the company says a CIO survey shows just 20 percent plan to spend more than budgeted this year.

In a happy sign for technology companies, Forrester Research on Monday said it raised its forecast for U.S. information technology spending growth in 2004 from 4 percent to 5 percent.

"We now expect U.S. IT spending in 2004 to reach $776 billion, and $825 billion in 2005, compared with $739 billion in 2003," Forrester said in a report.

That conclusion follows other reports indicating the market for technology purchases is getting at least a little healthier. A Gartner survey of 956 business IT leaders worldwide found that they expect to raise their technology budgets by an average of 1.4 percent in 2004.

Not all the news from Forrester was positive. The company said a survey of 112 North American chief information officers showed that for the remainder of the year, 19 percent plan to spend less on IT than currently budgeted. Fifty-six percent expect their spending to remain right at the budgeted run rate for the rest of the year. Just 25 percent of CIOs polled plan to spend more than budgeted, according to Forrester.

"Two-thirds of North American CIOs expect their business climates to improve over the course of 2004--and most expect their companies' fortune to improve faster than those of their peers," Forrester said in a report. "But this doesn't necessarily mean an increase in spending levels, perpetuating the trend of doing more with less."

In revising its U.S. IT spending prediction, Forrester said it analyzed the financial reports of 20 IT vendors, along with IT investment data reported by the U.S. Commerce Department for the fourth quarter of 2003. Forrester predicted computer hardware spending will grow 10 percent this year, and software spending will rise 8 percent. Spending on networking and communications equipment will edge up 1 percent, according to Forrester.