IT Spending Going Up for Second Half of 2003

Gartner analysts say current uptick is a step toward turnaround in IT demand

Gartner analysts say current uptick is a step toward turnaround in IT demand

Stamford, CN — August 18, 2003 — Early signs exist that IT spending will strengthen in the second half of 2003, which provides the necessary first steps for a turnaround in IT spending for 2004, according to the Gartner Technology Demand Index, an index included in a monthly economic indicator service launched by Gartner Inc.

According to a weekly poll drawn from a 20,000-member Gartner panel of IT decision makers from small, midsize and large businesses, U.S. businesses spent below their budgeted levels, recording a score of 95.1 on the Gartner Technology Demand Index for July (an index value of 100 would mean businesses spent exactly what they had budgeted for the month). After hovering around 80 in March and April, the Index has remained above 90 for the past three months, flirting with the key 100 level. This indicates that IT demand is slowly returning to budgeted spending levels, Gartner said.

"The underlying data still reflects a conservative market that is focused on cost control. The overall positive trend is offset by occasional negative data points, which we anticipate will continue to decline in frequency through the end of the year," said David Hankin, senior vice president and general manager of Gartner. "Based on the trends we see, we are optimistic that spending will return to or exceed budgeted levels in the fourth quarter of this year."

In July, software spending went above the budgeted parameters as the software segment scored 107.3 on the Technology Demand Index. One application area that has shown the strongest current demand is the design and engineering segment.

"The strong current demand in the design and engineering area is primarily due to the growing interest in new standards such as J2EE (Java 2, Enterprise Edition), .NET and Web services, which require new tools for building applications," Hankin said.

The Gartner Technology Demand Index measures IT decision makers' purchase preferences across more than 400 vendors by sector and product. Vendors ranked high by this measure stand to gain the most in demand in 2004 relative to 2003. Large vendors with strong brands, such as Cisco Systems, Dell, IBM and Microsoft, dominated the vendor rankings.

The Gartner Technology Demand Index is an offering within Gartner IT Watch. Gartner said its IT Watch uses results from weekly polling of the 20,000-member IT decision maker panel to produce an early warning indicator for investment professionals and vendors. Gartner IT Watch captures short- and long-term attitudes toward investment in IT products and services, and reflects anticipated changes in spending trends because of current events and broader economic factors.