IT budgets are being refocused as businesses are forced to face new economic realities and pressure mounts to use IT to cut costs and streamline processes.

The UK Business Confidence Monitor from the Institute of Chartered Accountants said that IT decision-makers expect prices

to rise by 1.8 per cent over the next 12 months. Confidence in the sector has dropped to a rating of minus 18.2, though it remains higher than the UK average of minus 26.

Tim Newing, IT director at EasyJet told Computing the economic climate has affected the firm’s development plans enormously.

“Instead of concentrating on business growth and innovation, we are now turning our heads to efficiencies and cost cutting. We are in the process of devising our budgeting for next year and IT plans have changed in line with the new business strategy,” said Newing.

“Keeping the department’s morale during tough times is no easy task, but communicating the changes is essential.

“It is a question of doing different things as opposed to stopping doing anything and telling people that projects may be slightly different to what we had planned originally. In the next two years the focus is driving efficiency as much as we can, so that we are well positioned to return to growth and innovation when the downturn is over,” he said.

George O’Connor, director of IT software and services research at stockbroker Panmure Gordon, said: “The recession represents an opportunity for process rejuvenation. While we have yet to see this start in anger, we expect a sea of transformation-type deals to be signed in vertical markets from public sector to retail and financial services as companies see the downturn as an opportunity to de-layer current business practices.”

Research by Gartner claims that the falling US dollar, technology shifts and obsolete systems replacement will spur worldwide IT spending to $3.4 trillion in 2008, up by eight per cent compared with 2007.