Compaq damns 'boom and bust' IT spending cycles

Far from cutting technology budgets during harsh economic times, IT directors are being urged to commit at least 30 per cent of their spend on brand new, non-core projects.

This is view of Hugh Barton, Compaq's director of marketing and enterprise. Simply cutting budgets and then increasing spend when things get better is a recipe for disaster, Barton believes.

Barton told Scotland on Sunday : "This cyclical mentality that companies generally bring to their IT budgeting means that during a recession, budget is usually cut on those innovative projects that provide businesses with a competitive edge."

According to research released by Forrester last week, European IT spend is likely to remain stagnant over the next 12 months. Forrester estimates spend will increase by just 0.7 per cent during 2002 before rising to a steady growth rate of 7.8 per cent in 2004.

Compaq, which like other technology vendors has much to gain from firms maintaining high spending patterns in the coming year, argues that companies must demonstrate an Innovation Quotient (IQ) of at least 30 per cent. IQ refers to non-core business spend, new projects that are likely to differentiate one business from its rivals.