IT budgets up in 2004, says Gartner

IT budgets will see "tempered" increases next year as businesses shift their focus from cost cutting to innovative technologies that will help drive revenue growth, according to analyst Gartner.

Gartner's annual forecast, unveiled at its Symposium in Florida this week, is for worldwide technology spend to grow 5.4 per cent to $2.4tn next year compared to $2.27tn this year.

Peter Sondergaard, head of European research at Gartner said this signals the end of the "gap year" when CIOs were told to cut IT overheads and get the most out of their existing infrastructure to moderate but steady increases in budgets.

He told silicon.com: "There will be no massive increases in budgets. But as you get into next year the focus of enterprises will shift from cost cutting just to reduce budget cost to cutting cost with the focus on creating agility - to developing top-line revenue growth."

Sondergaard said the next two years will see the convergence of several much-hyped technology trends, such as wireless broadband and web services, reaching market maturity and critical mass among customers, which will form the foundation of new platform for business process change and increased productivity.

"Three years out every device you buy will be wireless enabled whether you like it or not. And the decrease in power consumption of devices will support an always on, always connected environment," he said.

Outsourcing will continue to grow, particularly in Europe, and Gartner continues to advise firms to look at the possibility of farming out at least some of their non-core infrastructure. Hardware is also predicted to make a surprise return to growth with a 4.4 per cent leap in 2004 to $355bn from recent flat and negative growth, as companies enter their replacement cycles in 2004.

Sondergaard said: "The replacement cycle is driven by the current focus on cost cutting and consolidation. Companies will start in 2004 and really ramp up in 2005."

But the picture is not rosy across technology markets and Sondergaard said some market, such as servers and telecoms hardware equipment will continue to be "challenged".