IDC: IT budgets to remain flat in 2012

By Stuart Sumner
23 Jan 2012 View Comments

The majority of organisations are not planning to raise IT budgets in 2012, with spending to remain low as the global recession continues to paralyse European economies.

This is the view of analyst firm IDC, as set out in its new report, 'IDC European Enterprise Pulse 4Q11: Organizations Batten Down the Hatches for 2012'.

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However, the good news for IT suppliers is that while most firms may not be planning to raise spending, a significant minority are.

The survey found that 40 per cent of organisations expect to raise external IT spend on hardware, software and services, while only 17 per cent expect external IT spend in 2012 to decline. The remainder expect spending to continue at the levels seen in 2011.

However, most firms increasing their IT spend are only planning to do so roughly in line with inflation. Of those planning to increase spending, only a quarter are planning to raise it by five per cent or more.

"These spending plans may seem optimistic at first sight, given the economic environment, but in fact total external IT spend budgets for 2012 are well down on the equivalent budgets for 2011," said report author Douglas Hayward, research director at IDC European services research.

IDC puts this stagnation of IT budgets down to lowered consumer and business confidence, and to the worsening economic outlook.

"Western European organisations are huddling toward the middle in their IT budgets for 2012; their plans are tending more toward stasis. This will be a conservative year in which discretionary spend will be held to a minimum for most organisations," said Hayward.

He added that IT spending in 2012 will play out much like in 2011, with a minor decline overall predicted.

"The impact is not necessarily dramatic in real terms; however, since 2012 budgets are not significantly down on the actual spend outcomes during 2011. So the bottom line is that 2012 is shaping up to be like late 2011 – only a bit worse."

Thomas Meyer, European vice president for systems and infrastructure solutions at IDC, explained that budgets could not realistically fall much lower than 2011 levels.

"Our interpretation is that organisations feel that they cut back their spend sufficiently during 2011 in response to worsening conditions, and they are hoping to get by this year on spend levels relatively close to those of 2011.

"For many organisations, there is simply less potential to cut external spend, and they may be locked into contracts that limit their leeway to reduce external IT spend. Current budgets could, however, be significantly revised downward during 2012 if economic conditions were to deteriorate dramatically."

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