Study: IT spending to improve in 2004

After meager spending in 2003, businesses are likely to shell out more than their planned IT budgets for this year, according to market researcher Gartner.

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After low year-end spending in 2003, businesses are likely to spend more on information technology than what they have budgeted for 2004, according to market research firm Gartner.

Gartner's weekly survey of decision makers in small, midsize and large companies revealed that businesses continued to spend lower than their budgets in 2003.

"Organizations were increasingly reluctant to part with unspent IT budget dollars throughout the last quarter of 2003," David Hankin, senior vice president at Gartner, said in a statement. "There was no 'flush' of budget spending at the end of 2003. Low year-end spending was the rule across all technology sectors, organization sizes and vertical markets."

But Gartner analysts feel this trend could mean good tidings for the IT industry in 2004. They expect growth to be strongest in the public sector and the manufacturing, communications and health industries.

The survey showed that companies expect to increase their spending on software used for maintenance, productivity and information management.

However, businesses may be forced to shell out more as enterprise software makers raise maintenance fees and push customers to move to new versions of applications. For instance, Gartner said, more than half of SAP's nearly 20,000 customers, faced with the end of standard application support at the end of last year, had to consider paying 2 percent more to extend support through 2004.

Growth in hardware spending is expected to be more modest. Although there may be more units sold, falling prices of hardware means that companies won't have to greatly increase their spending, Gartner said. IT managers in businesses are planning to spend more on mobile devices such as handhelds and notebooks, while spending on desktops and storage devices may go down.