Spending Growth Slows, But No Panic

An economic slowdown provides the ultimate test of how business executives view information technology. They are forced to decide which category systems fall into: need to have, nice to have or in your dreams. Some abort projects, opting for short-term savings over long-term gains. Such pennywise, pound-foolish missteps can haunt companies–and careers–for years to come.

Our 2008 IT Spending Survey was fielded in late December and early January, when worries about the economy dominated the news. However, results show that despite growing concern over IT costs, executives are not making panic-stricken purchase and deployment decisions. Overall spending growth, on average, is down, but that reflects belt tightening and a long-term shift in cost structure at large organizations toward services. Average spending is increasing quickly among companies earning less than $500 million.

Other indications that companies are not sacrificing IT: Overall, projects will make up nearly half of all 2008 IT spending, and spending on enterprise applications, virtualization, storage–technologies needed to achieve strategic business goals and reduce long-term IT costs–is growing by well over 10 percent. (The survey covers 35 technologies and 15 kinds of consulting, outsourcing and managed IT services.)

We can’t say a recession won’t push companies to make painful choices down the road. But for now, IT investments continue to be made. It doesn’t look like CIOs are about to panic anytime soon.