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Poll: IT Spending Expected to Fall

IT spending in 2005 is expected to fall somewhat according to a new poll from CIO magazine. However, there are certain sectors, including security and storage, that are reportedly expected to rise. The magazine conducted the poll during a one-week period in December that garnered 243 responses from a cross section of industries. Only 6.7 […]

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SMK

Sean Michael Kerner

Jan 3, 2005

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IT spending in 2005 is expected to fall somewhat according to a new
poll from CIO magazine. However, there are certain sectors, including security and storage,
that are reportedly expected to rise.

The magazine conducted the poll during a one-week period in December that garnered 243
responses from a cross section of industries. Only 6.7 percent of poll
respondents indicated that they expected IT spending to increase in 2005,
which was a decline of 1.7 percent from the poll’s November results (8.4 percent).
IT budget increases have also fallen from 9.1 percent in November to only 6.6 percent in December.

According to the magazine’s poll, IT compensation
costs, including salaries, benefits and bonuses excluding stock options,
increased by an average of 5.8 percent in 2004. The poll results also give a cloudy
view of how respondents view the IT labor market, with 13.6 percent noting that
IT pros are hard to find, while 11.9 percent thought IT pros were plentiful.
That said, 72.8 percent noted that, “IT professionals are available.”

IT security spending is on the upswing with 60.9 percent of poll respondents
indicating that they were planning on increasing spending over the next 12
months. The expected growth in security spending represents a 7.7 percent
increase over November expectations (53.2 percent). A number of different studies
in 2004 painted a very vivid picture of enterprises’ attitudes toward IT security
spending.

A September Ernst & Young report
noted that only 17 percent said spending would increase significantly,
and 52 percent thought it would increase only slightly. In July, research
firm IDC reported
that 59 percent of its survey base indicated that IT security spending
would increase.

According to the CIO magazine poll, storage spending is also expected
to grow in 2005 at a greater pace than previously thought: 53.6 percent
of respondents now plan to increase spending on storage by 1.7
percent; this is up from 51.9 percent in the previous month’s poll.

Hardware spending is also expected to benefit in 2005, with 45.7 percent of
the respondents noting that they plan on spending more, though that number marks a 3.8
percent decline from November expectations.

“We witnessed a very positive upswing in tech spending
and hiring and what seems to be a reopening of CIOs’ wallets,”
said Gary Beach, group publisher of CXO Media, in a statement. “In 2005, I expect
we will see continued slow but steady growth. However, with so many potential
obstacles such as energy prices, Sarbanes-Oxley and geopolitical uncertainty,
it is unlikely we will see a bold transformation of IT in the coming year.”