Corporate IT Spending Down, Pointing to US Recession

February 27, 2008

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Corporate spending on IT is down in the first quarter, with 27% of companies reporting that they have spent less than planned in Q1 and 23% saying they will reduce or halt IT spending in Q2 – figures that raise concerns of a US recession, according to a ChangeWave study.

Only 15% of respondents project an increase in spending, down nine points from the last survey, in Nov. ’07. More companies are projecting a decrease, or no spending altogether, than they have in more than six years:

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Those results were consistent across companies of different sizes (based on number of employees):

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IT segments spending for which declined most from Nov. ’07 to Feb. ’08:

  • Storage (down 6 points)
  • Servers (down 4)
  • Software Enterprise Applications (down 4)
  • Security (down 3)

PCs were the only category where spending increased (up 1 point), while spending on networking and outsourced IT services such as systems integration and implementation did not change.

Willingness to spend on IT products and services is low:

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  • 43% say their companies are giving a “green light” (conditions are normal), a 9-point drop.
  • 53% rate willingness at “yellow light/red light” (cautionary), an 11-point increase.

The forecast for the rest of 2008 is neutral: 19% expect growth in their IT budget, 20% predict a drop, and 51% believe it will remain the same, according to the ChangeWave survey.

“This is pretty non-ambiguous stuff here,” Paul Carton, director of research for ChangeWave, said of the results. “But it’s not the end of the world, either…. We’re having a tough quarter right now. Spending is down. That doesn’t mean there aren’t pockets where things are doing OK.”

“We find in our world of measuring change, the consumer spending is two-thirds and corporate spending is one-third.”

About the survey: Between Feb. 11 and Feb. 15, ChangeWave collected responses from 2,013 people – all of whom are involved with IT spending in their organizations. Of the respondents, most worked for US companies, and 7% worked for Canadian firms; a small number were from other nations.

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