Analyst IDC is predicting only modest growth in IT spend of around six per cent by 2005, as the need to justify investments in new technologies reaches an all time high.

Today's focus for chief information officers is cutting costs, looking at outsourcing to deal with complexity, and working with the business to make IT strategies as flexible as possible.

"There is a new level of scrutiny that management is putting on IT projects," John Gantz, senior vice president and chief research officer at IDC, told delegates at the analyst's Technology Forum in Paris.

But a surge in the use of radio frequency identification (RFID) tags, the boom in wireless technologies and hotspots, and the importance of convergence are all expected to have a huge impact on the industry.

IDC estimates that 140,000 wireless hotspots will be in place across western Europe by 2007. Perhaps more importantly there will be one trillion RFID devices in use within the next 10 years from less than one billion today.

"That will create a huge amount of information that companies need to make sense of back in the enterprise," said Gantz.

"The bandwidth required by this and mobile devices will double in the next four to five years and will explode by 2012.

"Voice over IP is real and VoIP minutes of use will double this year and grow tenfold by 2007."

Although many new IT projects have been put on hold, IDC is also predicting increased investment in outsourcing and integration technologies.

This will come about as companies look to take complexity and risk out of the IT decision making process and reap the benefits of existing technology investments.

At the same time, internet adoption across western Europe is predicted to grow dramatically from its existing 159 billion users to around 250 billion by 2006.

And the total spent on online commerce across the region is expected to increase fourfold to $2bn in the same period.

"The challenge is adjusting to more uncertainty and complexity, but you can't hardwire strategy or architecture if all of these changes are going to come in 10 years' time. You need a bit of flexibility," said Gantz.