IT spending escapes slowdown shackles

22 Oct 2003 View Comments
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A substantial recovery in IT spending is looking increasingly likely in 2004, says Gartner.

A rising number of companies are refreshing their legacy equipment and installing innovative new technologies to drive revenue growth, chief executive Michael Fleisher told delegates at the Gartner Symposium/ITxpo in Florida this week.

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The analyst predicts that global technology spending will increase 5.4 per cent to £1,440bn next year.

And Fleisher says the recovery in IT capital spending is likely to accelerate slightly through 2005 and 2006.

'A big turn is coming. We believe 2006 will look just as different when compared with 2003 as 2003 looks compared with 1999,' he said.

'Companies are beginning to make the turn from protecting profitability to driving growth. Cost cutting will remain important, but it will no longer be your chief executive's number one priority.'

Gartner has identified four technologies that will be used to support business growth: secure wireless broadband; 'always on, always connected' mobile devices; the real-time enterprise infrastructure; and a move to service-oriented IT architectures.

'Just as the internet unleashed productivity gains that revolutionised the securities, music and travel industries, the next wave of innovation triggered by these four technologies will be equally groundbreaking,' said Fleisher.

Gartner says many companies have successfully used a range of methods to focus their budgets on core business strategies over the past three years, despite the downturn in IT spending.

These methods include the outsourcing of non-core technology functions, standardisation of the IT infrastructure, and reducing the number of products and suppliers employed, while maintaining control of strategic planning and architecture functions.

'IT organisations must be ready to support two distinct functions going forward. A continued vigilance around tightly managing costs and driving efficiency - and support for your chief executive's emerging priority of innovation to drive growth,' said Fleisher.

Confidence in the prospects for the IT sector was also reinforced this week by a series of good financial results from most of the major IT vendors (see box left).

Intel, Texas Instruments and AMD all posted good figures, showing a strong upturn in the semiconductor market.

'There have been some clear winners, as well as some losers,' said Meta Group programme director for infrastructure services Phil Dawson.

'Companies like Intel have had big opportunities as many firms migrate more expensive Unix servers onto low-cost Intel-based Linux platforms.'

'On the other hand, firms like Sun have failed to capitalise on this, which has been highlighted in their weaker results,' he said.

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