IT Spending Slowing, Not Stopping

Datamation content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

Yes, the slowing economy has forced many IT managers to scale back budgets this year. But a series of recent surveys shows that corporate spending on info technology is still increasing, albeit at a slower rate and in different ways.

While almost half of IT professionals asked by Web media firm TechRepublic said they’ve had to downgrade spending plans for the year, almost two-thirds say their budgets will still increase.

At the same time, buyers are much more focused on return on investment as a priority. Consulting is the purchase most likely to be cut, or dropped altogether, while training and purchases of network infrastructure remain least affected.

TechRepublic CEO Tom Cottingham said, “Companies are shifting their priorities and investing in core equipment, like networks and servers, and areas that offer more direct return on investment. When money is tighter, IT investments are still critical — they can help drive new efficiencies and productivity — but they must show return more quickly.”

Meanwhile, companies with more than 5,000 employees will boost their Internet related budgets by almost 20 percent, an Interactive Week magazine study determined.

And, in general, business conducted over the Internet continues to soar. An e-business media company called Line56 found that companies across all industries expect online transactions, both front- and back-office, to double this year.

Interactive Week’s survey of IT managers for large corporations found that average buys of Net products and services will grow from $16 million to $19 million this year. IT staffing continues to be a priority as well, as a large majority expect their staffs to grow.

Interactive Week Editor John McCormick said, “Many enterprises continue to push ahead full-bore with portfolios of e-business projects. Yet ‘interactive managers’ are on the hot seat in today’s cost-conscious, produce-or-else corporate environment. They are expected to deliver on the full value of business transformation.”

That transformation continues to take place online, as average revenue of online transactions for large corporations is expected to almost double, from $62 million to $112 million. That parallels finding by Line56, whose survey respondents across all industry sectors said they expect business transactions to double within the next two years.

“Decisions have gotten back to the basics,” said Line56 CEO Paul Higgins. “What types of e-business spending can deliver the fastest ROI? How can e-business be used to maintain or establish a competitive advantage? What business process changes should accompany a technology implementation?”

Plans to move other corporate services online — data mining for improved customer marketing, supply chain management, and general back-office purchasing and planning — remain on the fence.

TechRepublic found that about 10 percent of IT managers are most likely to cut the “Web-ification” of such services if the economy continues to head south. But a different 10 percent, presumably working for different sorts of companies, said those remain their top priorities.