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Europe holds back on IT investment
Cost cutting remains top priority...

By Andy McCue

Published: Monday 08 December 2003

Cutting costs and security are the top IT strategy priorities for 2004, with IT decision-makers forecasting a "steady" rise in budgets.

The NOP's annual World Technology Confidence Barometer survey of 1,500 IT executives in the UK, US, France and Germany is predicting a 5.3 per cent rise in IT investment, although that varies in each region.

The US is the most optimistic with six per cent, but Europe is more cautious with the UK on 4.7 per cent and France lagging behind at only 2.6 per cent. And this compares unfavourably to last year when a 6.8 per cent rise was predicted for Europe.

Richard Jameson, managing director of NOP World Technology, said France and Germany in particular are experiencing sluggish GDP growth, and that caution is spreading to the UK.

"There is a little bit of concern in the UK whether the upturn in interest rates is going to start slowing things down next year," he said.

The main reason for more muted spend in Europe is caution among companies, according to the survey. Firms with annual sales over $750m are predicting growth in IT budgets of only around four per cent for next year.

But IT managers may yet be in for a surprise Christmas windfall from their board. The survey found IT managers forecasting around four per cent but CIOs and CEOs predicting growth rates of over eight per cent for IT spend.

This may indicate that senior executives have not yet communicated planned increases in IT spend to those further down the decision-making chain, said the report.

Despite recent predictions of an upturn by some analyst groups, cost cutting remains the top priority for a third of IT executives. Security showed a significant increase on last year, with 23 per cent saying it is their biggest issue.

Jameson said: "CIOs are still having to keep costs under control and are not feeling in the mood to put to the board the bigger-scale capex investments."

Other areas of growth include storage, web-based applications, broadband, and spam-filtering software.

"Companies have got more security conscious and it is seen as a small niche not restricted by the same rigours of IT budget control," said Jameson. The other area is storage. It is spiralling because it impacts on the ability to do business if companies don't have the storage capacity."

New data in the annual report also shows that users are sticking with familiar trusted brands in hard times. Major brands such as Microsoft, HP, Dell and IBM all showed clear momentum among respondents.