Firms are expected to increase their IT spending at a greater rate next year, with much of the money going towards Windows upgrades, according to new research.

The National Computing Centre (NCC)'s Benchmark of IT Spending 2004 survey found more than half of respondents expected their IT spending to increase next year, and the average increase was predicted to be almost two percent, up from the estimate of 1.4 percent for this year.

The report indicates a mood of cautious optimism, according to Ian Jones, the NCC's head of publishing.

"We identified some emergent areas. The health sector has materialised as a real area of IT spending growth," Jones said.

Although the finance sector was identified as the highest spender on technology, the level amount spent was significantly down on last year - falling from almost £10,000 per end-user to just over £6,000. "But this [decline] is probably because they're coming to the end of their three-year cycle," commented Jones. "We're expecting to see some big growth figures in this sector next year."

Despite some reports of growing interest in open source alternatives for corporate desktops, the NCC found that Windows still dominates. And compared with last year, fewer organisations now have plans to deploy desktop Linux.

The study indicated that within two years, more than 60 percent of corporate desktops will be upgraded to Windows XP, while Windows 2000 will be running on a fifth. Over the same period, the total number of Windows desktops is expected to increase by four percent.

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