Corporations slash IT spending plans

Corporates are downgrading their IT spending plans for 2007, largely driven by cautious forecasts for the global economy.

A survey released on Friday found that large businesses worldwide expect to spend an average of just 2.8 per cent more on IT next year. This is a significant drop on predictions made earlier this year, when the average increase was forecast to be six per cent.

In the UK, corporates are planning even less of an increase - just 0.9 per cent.

But there are huge differences between vertical sectors. Media, pharmaceutical and healthcare companies are planning to increase their spending on IT next year by an average of 6.9 per cent, 6.4 per cent and 5.6 per cent respectively. But manufacturers of consumer products are planning to cut their expenditure by 5.6 per cent.

Jed Rubin, a director at Gartner Consulting, which carried out the research, said: "A number of factors have combined to force enterprises to lower their IT spending forecasts from the first half of 2006."

Rubin said that businesses had spent more in the past year on what he called "'run the business" expenditure than they had planned. This would lead to IT departments focusing on "managing business demand better and improving operations internally", Rubin said.

Healthcare companies are spending more because of ageing populations, while the penetration of IT in media companies had grown tremendously due to their complex models for delivering content.

Richard Thurston writes for ZDNet UK.