IT recovery – is it on or off?

Is there really an impending tech recovery on the way or is a rise in IT spending just a blip in an overall trend of tightly-shut wallets? Gartner fancies it could be the latter, with research from the US wing of the analyst group showing that a large number of businesses are unwilling to get spendthrift with their budgets.

And it's the size of the business that's dividing the spenders from the savers. The most reluctant to spend are the smallest companies, whose spending has declined since last quarter, while the largest firms are also reticent to hand over their credit cards quarter-on-quarter, but were less under pressure from budgetary constraints than their smaller cousins.

Medium-sized businesses, however, are leading the way. IT spend in the sector has been strong for several months, with financial and health companies being the big spenders.

David Hankin, senior VP of Gartner, said in a statement: "While current demand among small enterprises has weakened, their strong projected spending in 2004 strengthens the upward momentum provided by midsize enterprises. Only large enterprises appear to be consistently sluggish, which does cause some concern over the depth of any future recovery."

Overall, spending across the sector was down, with Gartner predicting that it's the big fish and the minnows that will ultimately cause a recovery to stall or succeed.

Hankin added that the current period "is indicating potential market weakness among small and large enterprises, which are reluctant to spend at budgeted levels. However, midsize organisations may be the economic vanguard that will stimulate spending throughout all sectors. We continue to expect that...the fourth quarter will show expected gains as companies clear excess budgets to gear up for a stronger business environment in 2004. Failing this, the 2004 recovery is in jeopardy."