IT spending expected to increase this year

The centralization of corporate information and resources is expected to drive the enterprise market’s spending on ITEven in the context of a lack-luster economic environment, In-Stat/MDR estimates that overall enterprise (firms with 1000+ employees, including government organizations) IT spending increased 3% between 2001 and 2002. It’s a sector that is expected to show growth this year as well. The high-tech market research and consulting firm reports that, for the most part, the centralization of corporate information and resources is expected to drive spend on technology for the next few years, primarily in the form of increasing connectivity requirements (including remote access/VPN solutions), continued investment in systems (particularly more mobile client devices) and expanded use of managed services. However, according to Kneko Burney, In-Stat/MDR's Chief Market Strategist, growth will be mild for years to come. "Regardless of the previous years' trends, enterprise IT spending will rebound slowly, but steadily, through 2006. There is still too much uncertainty in the worldwide economic environment. This, combined with these customer's changing requirements for mobility and need for improved information management and access, is expected to lead to cautious, hard-nosed IT investing in this market." Burney states that these firms are expected to look for investments with a well-defined, 12-18 month return on investment, especially those investments that can improve the efficiency of their core business operations or the productivity of its workforce. In the shadow of a lagging economy and quickly changing world events, addressing the IT needs of this market will likely be a roller coaster ride, particularly in the near term. According to Burney, "For the time being, vendors targeting this market are encouraged to focus on solving the most essential, business-critical problems, like work mobility and access. In the medium- to long-term, these customers will begin to think more out of the box again in terms of IT planning, but are likely to continue to focus their resources on solutions that are modular in nature and address key business problems and/or enhance specific business processes."In-Stat/MDR also found that enterprise businesses spent more than $225 billion on information technology in 2002; that by 2006, enterprise firms will spend nearly $256 billion on information technology products, services, and personnel; that in comparison to other business segments, the overall enterprise market remains the largest in terms of IT spending; that spending on telecom services and equipment is expected to experience the greatest growth moving forward; and that the services industry, including healthcare, legal, accounting and management consulting services, accounted for the largest share of IT expenditures among US businesses in 2002. Spending by services firms is also expected to experience some of the fastest growth, moving forward, due largely to above average growth in the number of firms in this industry and increasing technology requirements. The manufacturing vertical accounted for the second largest share of US IT expenditures.The report, "Spend-Thrift?: IT Spending Across Technology and Vertical Market, Part One: US Enterprises (1,000+ Employees)" (#IN030756EM), presents five-year spending forecasts for overall IT spending in the enterprise market. Forecasts for spending for the six broad spending categories of computer hardware, applications, network hardware, telecom services and equipment, IT personnel, and outsourcing and hosted services are presented and broken down by size of business. The overall IT spending forecast is broken out by both size and vertical market. Data on how IT spending is allocated to remote branch offices and telecommuters by category is analyzed in this report. Source: In-Stat/MDR