Gartner Slashes IT Spending Forecasts for 2007
The Gartner Consulting Group of
Stamford, CT, slashed IT spending forecasts for those companies with
more than $1 billion in revenue ahead of 2007. Earlier in 2006, Gartner
projected an increase in IT spending at a healthy 6 percent for 2007,
but as corporations continue to reach for double-digit profit growth to
please stockholders, it was no longer possible to upgrade IT and
please Wall Street without drastic reductions in spending. Gartner
revised its forecast increase to 2.8 percent according to Gartner
Consulting’s Worldwide IT Benchmarking Group. The new results
undoubtedly will impact IT industry hiring in 2007.
“A number of factors have combined to force enterprises to lower their
IT spending forecasts from the first half of 2006,” said Jed Rubin,
director of Gartner Consulting. “Looking back at the distribution of
spending in 2006, enterprises spent more to support core business
operations. This includes spending to support increasingly complex
infrastructure and applications requirements, rising energy costs,
regulatory requirements and other non-discretionary spending to keep
the business running. This increased ‘run the business’ spending has
consumed budget resources that were originally earmarked for more
strategic and transformational investment. IT leaders are now planning
to optimize their spending in these areas in the year to come.”
According to the report, growth and transformation remain the top
priorities for enterprises in 2007, but any new investments need to be
funded by a significant reduction in existing ‘run-the-business’
spending. To support these priorities, IT organizations will
subsequently need to reduce their ‘run the business’ budgets by nearly
5 percent in 2007.
The new 2007 version of the Gartner Consulting Worldwide IT Benchmark
Service and the Worldwide IT Benchmark report includes five volumes of
comprehensive IT spending and performance data across 20 industries.
The report highlights comprehensive IT spending plans of more than
1,500 companies with more than $1 billion in revenue, combined with
historical spending and performance data on more than 10,000 companies
worldwide. This allows companies to look at key cost and performance
indicators by IT domain to gauge and manage organizational
effectiveness and performance optimization.
In 2007, the most significant difference in IT spending growth will be
in the Media industry, up to nearly 7 percent from 4 percent in 2006.
The consumer products industry will see the biggest decline in IT
spending in 2007, as spending is expected to decline by nearly 6
percent, down from an 8 percent increase in 2006.
Food and beverage processing and the insurance industry will remain
flat in 2007. Spending on IT will gain across the pharmaceuticals
industry, healthcare, travel, retail, engineering, and banking.
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