Enterprise IT budget increases signal recovery of global IT market
By Our Corporate Bureau | 13 Jul 2006
Mumbai: A new report by independent market analyst Datamonitor, Understanding IT Budget Trends reveals IT budgets have grown in 2006 and that the outlook for 2007 is also optimistic. According to the firm, whilst increases are not proving even across the board - with variations by geography and type of expenditure - relatively stable economic conditions have been showing a positive effect on enterprises' IT investments in the US and Western Europe.
Through interviews with 200 IT decision makers in enterprises in Western Europe and the US, Understanding IT Budget Trends, the first of a series from Datamonitor's Technology Trends service, provides insight into the evolution of enterprise IT budgets in Western Europe and North America. The report highlights areas of positive and negative growth in IT spending and analyses the reasons behind these trends.
The net effect of enterprises' budget changes is positive
The overall trend from the survey is that IT budgets have increased in 2006, with enterprises' forecasts suggesting slight increases to IT budgets in 2007. 43 per cent of the surveyed enterprises state that they see their IT budget increasing in 2007, compared to the 32 per cent whose budget increased from 2005 to 2006. Encouragingly for vendors, the percentage of enterprises that see their IT budget decreasing is likely to reduce, from 21 per cent in 2006 to 17 per cent in 2007. The net effect of current and forecasted budget changes is therefore positive.
IT budget growth is stronger in the US in comparison to European markets
In comparison to enterprises in European markets, a higher percentage of US enterprises have seen their IT budget increase in 2006 (64 per cent in total). US enterprises are also the most optimistic when it comes to anticipated IT budget changes in 2007, with 72 per cent expecting to increase their IT spending next year. Stable economic figures (GDP growth was 3.3 per cent in 2005) coupled with an open-minded approach towards new technologies is translating well into increased IT spending.
According to Datamonitor, the fact that economic growth is weaker in the European markets surveyed (GDP growth averaged 1.9 per cent in 2005 across the UK, France, Germany, Italy, Spain, Benelux and the Nordics) is clearly influencing enterprises' IT expenditure.
"A weaker economic environment causes uncertainty, can potentially delay investments in IT, and makes enterprises more hesitant to adopt the latest technologies," says Tim Gower, lead analyst at Datamonitor's Technology Trends Service and author of Understanding IT Budget Trends. "However, with stronger economic growth forecast in 2006, this is likely to reduce the degree of caution in IT budget setting in Western Europe, making the enterprise environment marginally less challenging for technology vendors."
