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Outlook for IT Budgets in 2007 Optimistic

IT budgets have risen in 2006 and the outlook for 2007 is also optimistic. However, increases are not even across the board, with variations by geography and type of expenditure. A recent Datamonitor survey of 200 enterprises in Western Europe and the US highlights areas of positive and negative growth in IT spending and analyses the reasons behind these trends.

The global IT market is continuing its recovery from the economic slowdown earlier in the decade. Gradual improvements in the economic outlook are generally having a positive effect on business confidence in the US and Western Europe. IT budgets have increased on average in 2006 and are likely to experience further growth next year. In comparison to European enterprise markets, a higher percentage of U.S. enterprises have witnessed their IT budget increase in 2006 (64% in total). U.S. enterprises are also the most optimistic when it comes to anticipated IT budget changes in 2007, with 72% 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.

The survey indicates that spending on hardware (34%) and software (29%) dominates IT managers' budgets. Although IT departments clearly allocate proportions of their budgets to IT services, communications and consulting, these areas are significantly smaller in comparison.

Perhaps understandably, the reality is that the internal IT department retains the most mindshare when it comes to addressing an enterprise's IT requirements. However, there is a high degree of openness when it comes to gleaning the expertise of external providers.


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