IT buyers prep for 2008 cost cutting

Microsoft Vista, open source rollouts relatively low on priority lists, Goldman Sachs survey finds

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2007 IT spending is on track, but cost cuts lie ahead, according to latest Goldman Sachs quarterly survey of 100 decision-making managers at Fortune 1000 companies

IT buyers won't deviate from spending plans this year, but new survey data from Goldman Sachs suggests many will cut costs and slow investments in 2008.

The financial services firm's most recent survey of 100 decision-making managers at Fortune 1000 companies revealed that many polled listed "cost cutting" among their 2008 priorities. Forty percent of respondents indicated their IT spending in 2008 would be the same or less than 2007, and nearly 30% expect budget increases to be less than 5%. About 30% are planning for increases between 5% and 15%. Yet close to 80% of managers polled also said cost-cutting was either a high or medium priority in 2008. The initiative moved up to the top 10 among priorities, No. 7 to be exact, from nearly 20 in the last survey, Goldman Sachs reports.

"Although most budgets will not be fully baked until November or later, our first inquiry on 2008 intentions indicates an anticipation of decelerating spending growth," the Goldman Sachs report "IT Spending Survey: Early look at 2008 less than comforting" reads. "The rise of "cost cutting" among spending priorities is also notable against the backdrop of the coming budgeting season."

The top six IT initiatives that remain strong among IT buyers are: business intelligence, server virtualization, security, application integration, server consolidation and ERP software. Other IT priorities that became more important to survey respondents include service-oriented architecture (SOA), storage management software, thin-client computing, software-as-a-service offerings and again cost cutting. Interest in data center consolidation and VoIP slipped in importance, and IT projects involving data center consolidation, Microsoft Vista and Office upgrades and open-source software continued to rank low among survey respondents, Goldman Sachs says.

"Open source software also continues to rank very low," the report reads. "Although recent survey indications have been relatively positive for adoption of Red Hat's Enterprise Linux, reluctance to adopt open source offerings in other areas of the software stack could imply limited open source revenue opportunity for markets such as middleware, database and applications."

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