Spending growth modest for 2006

Recent surveys show IT budget spending for 2006 will increase over 2005, and industry watchers say while the growth remains slow, a majority of IT buyers expect business to get better in coming months.

Forrester Research recently surveyed 922 IT executives and found 53% indicated they intend to spend more money on IT in 2006 than in 2005. Only 7% of the total surveyed expect spending to decrease, with the remaining forecasting no growth, Forrester says. Spending plans vary a bit based on the size of organization, but Michael Speyer, senior analyst with the research firm, says the projected spending indicates companies might be reducing cost-cutting measures in favor of IT investments.

For instance, Forrester broke out its research into two groups: IT shops with centralized control, and those with decentralized control. Speyer explains typically centralized IT governance indicates a company is attempting to consolidate its IT resources and cut costs, whereas decentralized, business-unit-led IT buyers tend to be more aggressive in their spending. The survey shows the contrary.

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Recent surveys show IT budget spending for 2006 will increase over 2005, and industry watchers say while the growth remains slow, a majority of IT buyers expect business to get better in coming months.

Forrester Research recently surveyed 922 IT executives and found 53% indicated they intend to spend more money on IT in 2006 than in 2005. Only 7% of the total surveyed expect spending to decrease, with the remaining forecasting no growth, Forrester says. Spending plans vary a bit based on the size of organization, but Michael Speyer, senior analyst with the research firm, says the projected spending indicates companies might be reducing cost-cutting measures in favor of IT investments.

For instance, Forrester broke out its research into two groups: IT shops with centralized control, and those with decentralized control. Speyer explains typically centralized IT governance indicates a company is attempting to consolidate its IT resources and cut costs, whereas decentralized, business-unit-led IT buyers tend to be more aggressive in their spending. The survey shows the contrary.

"The numbers show us that people are loosening the purse strings a bit across the board," he says. "But specifically, 60% of organizations with centralized governance of IT are planning to spend more in 2006, compared with 46% of decentralized IT, which could indicate a renewal of investments that had been on hold."

Separately, SG Cowen conducted a survey of 260 North American IT users and found "users remain optimistic about the prospects of their own business, with 72% of sites expecting business to improve over the next 12 months." The firm says respondents on average expect IT budgets in 2005 to grow 5.5% over the previous year and forecast another 6.8% growth in spending for 2006.

Click to see: Spending to rise

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