Forrester Raises Its 2004 US IT Spending Forecast
Forrester's First CIO Confidence Poll Confirms Cautious Optimism
Cambridge, Mass., March 29, 2004
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Due to stronger-than-expected economic and profit growth revealed in 2003 year-end GDP and financial reports, Forrester Research, Inc. (Nasdaq: FORR) is raising its forecast for US IT spending growth to 5 percent in 2004, up from 4 percent. In related research, Forrester's first CIO Confidence Poll, a survey of North American CIOs, confirms growing optimism for this business outlook but with a continuation of the trend in IT to "do more with less."
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In revising the US IT spending forecast, Forrester analyzed the financial reports of 20 IT vendors and the IT investment data reported by the US Department of Commerce. The fourth quarter of 2003 turned out to be a particularly strong one for IT spending, especially for computer hardware and network equipment, which led business investment.
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While spending in the first quarter may be a bit lower than expected, due to aggressive end-of-year discounting, the strong growth in the third and fourth quarters is a sign that companies have dusted off their checkbooks. The research provides the following snapshot for IT spending in 2004:
Where the type of forecast is not specified, bets will be settled as being for a Computer Straight Forecast.
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* Computer hardware will grow by 10 percent.
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* Software will grow by 8 percent, mostly for infrastructure and security software, but with some growth in enterprise applications.
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* Networking and communications equipment will be softer at 1 percent growth, due to higher 2003 numbers.
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* Although typically cost-saving investments, Linux and offshore outsourcing continue to be at the bottom of the list of spending priorities.
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* The government sector has the largest proportion of the total US IT spending of any industry.
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* The rate of price decline has slowed for computers, suggesting that stronger demand is stabilizing hardware prices.
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CIO Confidence Poll
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This month Forrester also announced the results of its first CIO Confidence Poll, a quarterly measurement of CIOs' confidence in the health of their industries, companies, and IT spending plans. The poll surveyed 112 CIOs from both Forrester's CIO Group and randomly selected companies, 75 percent of which represent enterprise-class companies with at least 1,000 employees. Forrester will survey this same population each calendar quarter. The initial quarters will be characterized as polls until a baseline is established, against which an index can be measured.
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Overall, Forrester found that CIOs were upbeat about the prospects for their industries' performance. Two-thirds of respondents expect their business climates to improve over the course of 2004, and most anticipate that their companies' fortunes will improve faster than those of their peers. However, more than half of the CIOs expect their IT spending to remain right at the budgeted run rate for the remainder of the year, indicating that the trend of "doing more with less" is now a permanent part of a CIO's role.
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The research mentioned in this release, "Projected 2004 IT Spending Growth: Inching Upward" and "CIO Confidence Poll: Q1 2004," is available to Forrester WholeView 2TM clients and can be found at www.forrester.com.
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Forrester is an independent technology research company that provides pragmatic and forward-thinking advice about technology's impact on business. Business, marketing, and IT professionals worldwide collaborate with Forrester to align their technology investments with their business goals. Forrester offers products and services in four major areas: Research, Data, Consulting, and Community. Established in 1983, Forrester is headquartered in Cambridge, Mass. For additional information, visit www.forrester.com.
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Contact:
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Kristen Wilson
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Manager, Public Relations
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Forrester Research
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+1 617/613-6205
kwilson@forrester.com
