IT budget boost forecast for 2004

In a boost for technology companies, Forrester Research has raised its forecast for US information technology spending growth in 2004 from four per cent to five per cent.

"We now expect US IT spending in 2004 to reach $776bn, and $825bn in 2005, compared with $739bn in 2003," Forrester said in a report.

That conclusion follows other reports indicating the market for technology purchases is getting at least a little healthier. A Gartner survey of 956 business IT leaders worldwide found that they expect to raise their technology budgets by an average of 1.4 per cent in 2004.

But not all the news from Forrester was positive. The company said a survey of 112 North American CIOs showed that for the remainder of the year, 19 per cent plan to spend less on IT than currently budgeted. Fifty-six per cent expect their spending to remain right at the budgeted run rate for the rest of the year. Just 25 per cent of CIOs polled plan to spend more than budgeted, according to Forrester.

"Two-thirds of North American CIOs expect their business climates to improve over the course of 2004 - and most expect their companies' fortune to improve faster than those of their peers," Forrester said in a report. "But this doesn't necessarily mean an increase in spending levels, perpetuating the trend of doing more with less."

In revising its US IT spending prediction, Forrester said it analysed the financial reports of 20 IT vendors, along with IT investment data reported by the US Commerce Department for the fourth quarter of 2003. Forrester predicted computer hardware spending will grow 10 per cent this year, and software spending will rise 8 per cent. Spending on networking and communications equipment will edge up 1 per cent, according to Forrester.

Ed Frauenheim writes for CNET News.com