US and European IT executives will increase spending on technology in the upcoming year by a moderate amount.
The 2004 instalment of the NOP World Technology Confidence Barometer has shown the overall increase in IT investment in 2004 by companies will be 5.3 per cent, according to a survey of 1,500 IT decision makers in Germany, France the UK and the US. Despite signs that the global tech sector is improving, this survey compares unfavourably with the results of last year's Technology Confidence Barometer, when IT budgets were forecast to rise 5.9 per cent in the US and 6.8 per cent in Europe.
This year a 6 per cent rise was predicted in the US, with 5.8 per cent predicted for Germany, the most optimistic of the three European nations in the study. A meagre 2.6 per cent figure was produced for France, while the UK held the middle ground with 4.7 per cent.
"With recent macro-economic data in the US all heading in the right direction, corporate investment in technology appears to be holding up well," Richard Jameson, managing director of NOP World Technology said. "In Europe, however, the investment picture remains patchy, with only German organisations planning a noticeable increase in their IT budgets after several years of close cost control."
NOP attributes the muted figures for Europe to budgetary caution among large corporations. Firms with annual sales revenues greater than $750 million are predicting growth in IT budgets of around 4 per cent for next year, with smaller firms predicting higher spending growth in percentage terms.
Government, meanwhile, is pegged to be a big spender again in 2004, with IT spending growth anticipated to grow 6.7 per cent, more than double the 3 per cent forecast growth in the manufacturing sector.
According to NOP, greater pessimism about IT spending growth among industry workers may be the result of a lack of communication between top management and IT managers. CIOs, CEOs and other senior business respondents predict growth rates of over 8 per cent, compared to a rate of 4 per cent for IT managers.
"This may indicate that senior executives have not yet communicated planned increases in IT spend to those further down the decision-making chain," NOP said.
Unsurprisingly, 31 per cent of survey respondents said that cost-cutting remains an important concern and 23 per cent said that security was a top worry. Systems upgrades were cited as important by 24 per cent, with hardware upgrades and improving business continuity planning noted by 23 per cent and 20 per cent of respondents, respectively.
"The focus of businesses in Europe and North America remains firmly on tactical, day-to-day issues," commented Jameson. "IT vendors will be required to prove the security and bottom-line benefit of their solutions. Big-ticket investment in emerging technologies looks likely to remain a hard sell for the foreseeable future."