03 Apr Gartner: IT spending decline is confined to U.S.
Las Vegas, Nev. – Uncertain economic conditions in the United States are having no impact on planned IT spend outside the U.S., but American IT spending plans are a different story, according to Mark McDonald, group vice president and head of research for Gartner Executive Programs.
McDonald, commenting on the findings of a Gartner CIO survey on global IT spending, said projections for global IT spending remained the same as before – 3.3 percent growth for 2008.
However, weakening economic conditions in the U.S. has reduced projected domestic IT spending growth from the original forecast of 3.1 percent to 2.3 percent.
Overall, more than 60 percent of the 1,000 respondents worldwide reported no change in their IT spending plans for 2008.
McDonald, attending the Gartner Symposium/IT Expo 2008, said IT budgets in Europe and the Asia Pacific region, where economic conditions are better than in the U.S., actually accelerated in the first quarter, compensating for the U.S. decline.
“The view outside the U.S. is that this [slowdown] is a U.S. phenomenon,” McDonald said.
Less severe drop
Concerns about macro economic conditions and its impact on IT budgets led Gartner to conduct the survey of 1,000 CIOs between Feb. 12 and March. 12.
One in five survey respondents said their budgets would decline. Of those CIOs, most said their IT budgets would decline by 10 percent, which is a typical level in firms engaged in cost cutting across various departments.
McDonald said IT spending cuts aren’t as draconian as they have been in the past, an indication that IT has moved out of the “boom-and-bust cycle” and has become an essential core in the enterprise. He cited improved fiscal management among CIOs during the past five years, and an increased business concentration, rather than past functional focus, of IT budgets.
CIOs who are facing IT budget cuts largely have reprioritized their spending and are focusing on the most essential parts of their project portfolios, he added.
Of the CIOS who face spending cuts, only one-third of them have a contingency plan in place if the economy doesn’t pick up steam in the remainder of 2008. Of those who have a contingency plan, half doubted they would have to activate it.
The fact that two-thirds do not have a contingency plan is an indication that “CIOs must address this over the next 90 days,” McDonald said.
In the United States, IT spending declines were reported across several industries, most notably financial services, which has been rocked by the sub-prime mortgage crisis, plus healthcare, retail, and the public sector.
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