IT spending growth forecast to slow in 2007

IT spending is forecast to grow by 4 percent to 6 percent globally in 2007, versus 8 percent last year, according to a consensus of analysts' reports

IT spending is expected to rise 4 percent to 6 percent in 2007, down from 8 percent last year, as companies seek to rein in the expense of running their computer systems, according to a consensus of industry forecasts.

However, spending growth rates are expected to be higher for small to medium-sized businesses (SMBs) and in emerging economies globally than in more mature markets, according to the consensus report from AnalystPerspectives, a unit of IT and business books publisher SkillSoft.

The report also notes some seeming contradictions. It forecasts growth in the use of virtualization in data centers to reduce the number of servers needed, but still predicts strong growth in sales of server hardware. Virtualization makes it possible for a server to run multiple software applications and operating systems on the same physical server. The report forecasts healthy 6.5 percent growth in server sales, but also says more companies will be running those new servers as virtual servers.

This year, businesses will be able to invest more in strategic IT initiatives than they did last year, according to a forecast from Gartner Inc., one of several analyst firms included in the report.

Increased energy costs, regulatory compliance demands and other overhead meant that much of the IT budget in 2006 went just to keep operations going, wrote Jed Rubin, director of Gartner Consulting.

"This increased 'run the business' spending has consumed budget resources that were originally earmarked for more strategic and transformational investment. IT leaders are now planning to optimize their spending in these areas in the year to come," noted Rubin.

The forecasts also anticipate stronger IT spending by SMBs -- businesses with less than US$1 billion in annual revenue -- than large enterprises with more than US$1 billion in revenue.

AMI-Partners forecasts global SMB IT spending to grow by 10 percent in 2007. By contrast, Gartner forecasts large enterprise IT spending to grow by only 2.8 percent this year, down from 6 percent growth in the first half of 2006. The consensus is that SMBs are realizing the importance of IT to the success of their businesses.

IT spending growth will be strongest in some of the emerging economies. IDC, for instance, forecasts "scorching" IT spending growth of an average 14 percent in places such as China, Eastern Europe, the Middle East, Africa and Latin America. But India will top them all with a forecast 23 percent increase. By contrast, IT spending in the U.S. may grow 6.3 percent.

And even though Microsoft's Windows operating system is a significant presence in the business market as well as the consumer market, the market reaction has been "lukewarm" to its new Vista OS and Microsoft Office 2007 set of business applications.

AnalystPerspectives cites a CIO Magazine survey that showed only 15.8 percent of CIOs planned to upgrade to Vista or Office 2007 and only 8.3 percent planned to upgrade to both. The survey showed that 20.7 percent needed more information before deciding on an upgrade, but that 63.6 percent had no plans to upgrade.

CIO is owned by International Data Group, the parent company of IDG News Service.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Robert Mullins

IDG News Service
Show Comments

Cool Tech

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Breitling Superocean Heritage Chronographe 44

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?