IT budgets hit by millennium effect

European IT spending will remain flat throughout next year, according to one recent survey - but another analyst house is claiming that budgets will continue to grow as more money is devoted to EMU and ecommerce projects.

Research conducted by US investment bank Salomon Smith Barney (SSB) found that European IT directors are not expecting to increase their IT spending next year. In comparison, budgets leapt by 29 per cent this year.

SSB surveyed 46 IT directors in Europe's leading companies.

Niall MacLeod, equities strategist at SSB, said: "Spending this year was partly bumped up by year 2000. It was only 12 per cent of budgets in 1998, compared with 17 per cent this year."

But Stephen Minton, senior analyst with IDC, described the findings as "nonsense", and claimed: "Our research shows that IT spending will be fairly steady throughout the next five years, and we forecast growth over the whole of Europe at nine per cent in the year 2000, and over 11 per cent in the UK."

The mood is optimistic in the reseller community as well. Earlier this month, Computacenter CEO, Mike Norris, noted that his company's results for the first half of 1999 had felt the impact of Y2K, but expected a turnaround next year.

He said in a written statement: "There has been some evidence of a slowdown in the corporate market across Europe as the millennium approaches. However, we believe there is significant pent-up demand in our customer base which will be released next year."

IDC's Minton agreed with that assessment. "We see a refocusing of spending on different areas, resulting in drops in certain hardware segments and much higher growth in services and software. But the Y2K effect is not going to bring down IT spending overall, because once Y2K is over, there's EMU and ecommerce and lots of other factors keeping the market buoyant," he said.