Bleak prospects for IT spend in 2003

According to a survey of nearly 400 executives and attendees at Gartner Symposium/ITxpo earlier this month, 60% said their company IT budgets had been changed over the past three months with decreases outweighing budget increases. But the largest share of respondents (41%) said that their budgets had remained unchanged over the past three months.

Looking forward, the survey found that 46% of respondents expected their IT budgets to remain flat for the rest of the year with the remainder split between increases and decreases.

While spending has long been considered to be at a low point, the survey revealed the rather longer than expected delay in any potential return to broad IT spending.

According to Goldman Sachs, the survey further underlined its belief that IT vendors are in not only for a tough second quarter but that the lower spending levels will last well into 2003.

That led the investment bank to further cut its earnings estimates for a number of IT companies. These included leading software vendors PeopleSoft, SAP, Siebel Systems, Check Point Software and Rational Software. Goldman said it expected about a third of the 26 named software companies to post declines in software licence sales in this year second and third quarters.

As with previous studies this year, the bulk of IT spending is set for what are perceived to be key IT areas. The top three of these will be security, storage and web services. The study found that two-thirds of respondents plan to begin working with web services during the next two years.

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