IT spending projections for the next 12 months decreased in the April-June quarter, as CIOs predicted that they will increase IT spending by only 6.9 percent during the next year. That's down from 8.6 percent in the first quarter of the year, when CIOs said they expected spending to rise over the next year, according to the quarterly CIOMagazine Tech Poll released last week. "What is interesting is that when you look at it by company size, for the first time in four years, firms that have 5,000 or more employees are claiming their budget is going to increase more so than companies that have 100 or fewer employees," said Gary Beach, group publisher at CXO Media Inc. in Framingham, Mass. "Usually, it's the smaller companies whose budget is going to increase."
Quarter-over-quarter spending projections increased for computer hardware, telecommunications equipment, outsourced IT services, infrastructure software and security software, according to the survey.
While overall spending predictions dropped, 54.9 percent of respondents cited "enabling business processes" as their top spending priority for fiscal 2007, followed by 25 percent reporting that their priority will be "improving IT performance," according to the poll.
"The age of 'do more with less' is dead," said Beach. "This bodes well for the services sector, as CIOs and IT professionals will be leaning more on services companies. And it also bodes well for business application sectors, business intelligence and CRM."
When asked about spending across eight specific IT categories, the average percentage of panelists who said they planned to increase spending over the next 12 months was 43.1 percent in the April-June quarter, down from 44.8 percent who said that in the previous quarter. The percentage of panelists who plan to cut spending also decreased slightly, from 13.8 percent in the first quarter of the year to 12.7 percent in the second quarter.
Within the IT spending categories, security software replaced storage systems as the top priority in the poll, with 55.2 percent of respondents planning to increase spending in this segment. Computer hardware took the second spot, with 48.1 percent of respondents planning to boost spending, and storage systems took the third spot, with 46.1 percent planning to increase spending, according to the survey.
In the second quarter of 2006, 48.1 percent of panelists said they planned to increase spending on computer hardware, virtually unchanged from the previous quarter, while 14.4 percent said they intend to decrease spending. "The IT labor question still continues to be a pain point," Beach said.
According to the tech poll, 6 percent of the respondents reported that IT labor is "plentiful," up from 5 percent who said that in the first quarter; 64.3 percent said IT labor is "available"; and 25.8 percent reported that IT professionals are "hard to find."