by CIO Staff

Gartner Says IT Spending to Rise 5.5 Percent

Oct 13, 20053 mins

Led by small to medium-size businesses, IT spending in the U.S. will increase by 5.5 percent in 2006, although the job market for IT workers will remain “challenging,” Gartner Inc. said Wednesday.

While spending related to security and storage, two IT stars of recent years, is expected to slow next year, outlays for mobile devices such as BlackBerry and Treo handhelds will likely grow, as will investment in software development tools and middleware, according to preliminary results from a summer survey of 1,500 U.S. IT managers by the Stamford, Conn.-based research firm.

“Despite the spending increase, the message to IT managers is clear: You must continue to improve the efficiency of established IT investment areas if you want to fund substantial growth in IT or add IT professionals to the workforce,” said Barbara Gomolski, research vice president at Gartner, in a press release.

Gartner’s 2006 outlook puts it in the middle of the pack among research firms that look at IT spending. Forrester Research Inc. has predicted that U.S. IT spending would grow 7 percent this year and next, but slow in 2007 to just 2 percent. IDC’s FutureScan, a slightly different forecast that predicts U.S. IT spending for the next 12 months, cut its September outlook — when it projected 6.1 percent growth over the next 12 months — to just 2.9 percent over the same period. That, said IDC, reflects a dampened outlook for businesses in the wake of Hurricane Katrina and the possibility of permanently higher oil prices.

Gartner’s latest survey, by contrast, was conducted between June and August, before Hurricane Katrina decimated the Gulf Coast.

Small to medium-size companies, with fewer than 100 employees, are expected to increase their IT budgets by 7 percent next year. Larger organizations, with between 500 to 999 employees, will see IT budget increases of just 2.4 percent, Gartner said.

By industry, the service sector is the only one planning for double-digit IT budget growth, with an 11 percent increase expected. Financial services companies plan a modest 3.4 percent increase, Gartner said.

While hiring plans for 2006 remain modest, IT managers are likely to prioritize the hiring of project and program managers, IT administrators and system and network managers, according to Gartner.

Gartner did not offer any long-term forecasts. But Forrester is predicting that the slowdown in 2007 will continue for another year, before a revival in 2009 and 2010 as “companies will have absorbed the previous boom’s Internet technologies and will be poised to ingest newer ones,” Forrester analyst Andrew Bartels wrote in a report released Tuesday.

By Eric Lai, Computerworld