IT spending increases in North American market

However, further growth remains heavily dependant on economic confidence and is inhibited by a persistent atmosphere of caution and hesitancy..

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By  Greg Wilson Published  September 11, 2003

After two and a half years of stagnation and decline, information technology spending is on the rise in the North American market. According to an IDC end user survey, corporate profits and pent-up demand for system upgrades and replacements is driving system sales.

However, further growth remains heavily dependant on economic confidence and is inhibited by a persistent atmosphere of caution and hesitancy.

In the short term, there will be a heavy focus on infrastructure upgrades. However, a return to similar growth rates is unlikely.

“It's all about the infrastructure,” says Stephen Minton, director of worldwide IT Markets at IDC. “The mood of cost-control and caution persists, but alongside a realization of the urgent need for infrastructure upgrades,” he adds.

According to survey respondents, infrastructure projects will be the number one concern for 2004, just ahead of cost cutting, integration and security.

PCs and servers were identified as the most critical infrastructure requirement, in need of urgent funding. Infrastructure failure ranked only narrowly behind an improving economy as factors, which would drive increased IT spending over the next year.

Less than one third of IT departments expect to receive the necessary funding to complete critical and strategic objectives during the next twelve months. The majority of these companies identified economic uncertainty and pessimism as the primary inhibitor.

A large proportion also pointed to a short term outlook and the persistent mood of ‘good-enough computing’ in their organisation as underlying factors. The biggest IT focus for the remainder of 2003 was identified as cost cutting, narrowly ahead of infrastructure upgrades.

“The survey shows that only a small number of IT departments have been allowed to exceed their IT budgets over the past year,” comments Minton.

“For the CIO, the difficulty of winning funds for projects which are not considered mission-critical will remain challenging. More than one third of respondents said that two things are keeping them awake at nights – the thought of losing their jobs, and the thought of more budget cuts,” he adds.

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