"Cautious" increase in IT spend in 2006

IT spend is expected to show a "cautious" increase in 2006 with organisations investing the minimum required for the IT department to support the business, according to Gartner.

The latest figures from Gartner predict that European businesses will increase IT spend by three per cent in 2006, up from the 2.5 per cent increase in 2005.

Roger Fulton, VP and analyst at Gartner, said the figures shatter the myth of any great IT spending recovery.

He said in a statement: "The survey results show a cautious and constrained picture of IT spending in Europe; it is not the spending recovery hoped for by the IT community."

Fulton added the figures are a reflection of the fact that IT spending in Europe is closely aligned with gross domestic product growth.

He said: "Three of the four major countries in western Europe are struggling to maintain economic growth, which is linked to the limited growth in IT spending."

UK organisations actually plan a higher than average increase - four per cent - in IT budgets, although this is some way behind companies in Germany, Portugal and Spain, which plan the largest IT budget increases (up to six per cent) in 2006. However, Belgian and Dutch firms plan to reduce IT spend by two per cent.

Mobile devices such as handsets, laptops, tablet PCs and PDAs will experience healthy growth, as will security hardware and software - although this remains a relatively small percentage of overall IT budgets.

One area of software spend vulnerable to cuts is front-office applications which often come from discrete budgets that can be reduced at anytime. Spend on consultants and IT training is also discretionary and likely to be among the first things to be cut.

The research is based on Gartner's study of the IT spending intentions of 400 European organisations throughout the year.