Analysts Predict Slight IT Spending Rise

Don’t expect IT spending to increase too much in 2010, according to research firm Ovum.

There will be some uptick in IT budgets for the year, but only in the 1 to 5 percent range, Ovum analysts said in a report on 9 March.

In fact, most enterprises will see no change in their IT spending, a survey of IT decision makers by Ovum found. Some will see their budgets decline further.

“The survey data, while promising, does not translate into an IT spending recovery,” Ovum analyst Rhonda Ascierto said in a statement. “Realistically, the numbers more likely reflect the effect of previously deep budget cuts during 2008 and the first half of 2009, which left many IT departments operating at ‘bare-bones’ capacity.”

Overall, a third of CIOs said they expected their budgets to grow in 2010, though 42 percent said they expect their spending to remain the same as 2009. Overall, many enterprises still feel vulnerable and are uncertain about short-term business prospects, Ovum analysts said.

Another aspect that is weighing on budgets is the lost confidence IT decision makers have in their ability to accurately forecast IT spending trends, according to Ovum. Traditionally, their spending forecasts are usually within 5 percent of actual IT spending.

However, after the global recession kicked in full force in 2008, the gap between CIO forecasts and actual IT budget changes widened in 2009.

“Clearly the negative effects of the economic downturn were greater than expected and businesses were not prepared,” Ascierto said. “Many businesses made short-term cost savings by reducing their operational costs. The extent to which IT budgetary expectations were miscued in 2009 is likely to mar the collective psyche of IT decision makers today. The confidence of CIOs in their ability to predict IT spending with a reasonable level of accuracy has been splintered, if not shattered. Consequently, Ovum believes that 2010 will be a year of reckoning for IT expenditure.”

Businesses will most likely OK IT projects that make incremental modifications to the environments already in place, rather than ones that require extensive upgrades, the Ovum analysts said.

Ovum’s predictions are a little less optimistic than those of other analyst firms. IDC analysts in February predicted that IT spending will grow 3 percent this year, with much of that coming from such emerging markets as India and China. Worries about the global economy and a continued crunch on credit will help keep spending down, they said.

Gartner analysts said they expect a 4.6 percent increase, which while modest in traditional terms, is a huge jump after the wreckage left by the recession.