Business Prospects Fuels Budget Growth in 2004

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A new study from IDC indicates that companies are more optimistic about their business prospects than at any time in the past two and a half years. After a steady decline in optimism from the summer of 2001 through the winter of 2003, findings from IDC’s survey of 1,341 North American decision makers show a jump of almost 15 percentage points in IT and business executives who state they are currently “positive” or “very positive” about their business prospects. IDC expects this turn in business confidence will help fuel IT investments in 2004.

The study also reveals that 42.6 percent of the organizations surveyed intend to boost their total IT budget in 2004—a significant improvement compared with 2003 levels (31.1 percent)—and that a relatively small number plan to decrease spending. Compared with last year, a much lower incidence of companies that report not knowing in which direction their IT spending will go in 2004 signals that cautiousness is easing and a renewed commitment to IT investments is emerging.


“IT and business executives are increasingly optimistic about their company’s business prospects, and this optimism is contributing to a healthy outlook for IT purchases,” said Lucie Draper, program manager, Enterprise Technology Trends. “However, cost control remains a top priority, even though the uncertainty has diminished somewhat. And spending increases will vary from one vertical industry to the next, depending on each market’s attitudes and requirements.”


According to the study, the most IT-intensive industries are defined by the mean share of revenue spent on IT products and services, including the professional services and telecommunications industries. In the banking and business and legal services industries, the proportion of companies that expect to increase their IT budgets in 2004 is greater than in the aggregate market. Further, the average increase in that budget is significant among banking and credit institutions. More companies in the banking, telecommunications and resources industries than in other vertical markets are shifting IT budget dollars from internal to external spending for 2004.


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