Encouraging Signs of Investment in the IT Sector

In both the US and Europe encouraging signs of real growth in the beleaguered IT sector are revealed by the latest issue of the RoperNOP Technology Confidence Barometer published this week.

In the December wave of the survey, the RoperNOP Technology Confidence Barometer reveals significant planned increases in spending on certain key technologies, particularly those that harness the infrastructure of the Internet for organisations to communicate efficiently and securely. Growth in overall IT spending in 2003 is predicted to increase in both the US and Europe. In the US spending is predicted to increase by 5.9% over 2002, while an increase of 6.8% is predicted in Europe.

According to the RoperNOP Technology survey, the 'irrational exuberance' in the IT sector, prompted by deregulation of telecoms, panic over the millennium bug, and the dotcom bubble, has given way to sustainable levels of growth in key enabling technologies. And while they are less optimistic than their European counterparts about short-term prospects, IT decision makers in the US remain confident about the overall longer-term growth prospects for IT investment.

Significantly, IT decision makers see Web-based applications and VPNs as priority areas for IT investment, bringing closer the concept of 'the network is the computer'.

Data and communications security remain major concerns for decision makers; nearly two thirds (64%) say that they will spend more on security systems in 2003 compared with 2002, including anti-virus software, firewalls, access control systems and encryption technologies.

Significant investment is also predicted in data storage and high speed data transmission, indicating that users will want to keep and exchange even more of the information that can now be mined from raw data.

Predicted increases in spending on handheld devices, laptops and notebooks, coupled with forecast spending on wireless LANs, suggests that mobility, coupled with easy and convenient connectivity, are growing in importance.

The survey's results, however, are not an entirely good news story for the technology industry. US IT buyers are less confident about their budgets for 2003 than they were when last surveyed by RoperNOP Technology in July 2002. Buyer sentiment also remains fairly subdued in Germany, where the weak economy appears to be holding back technology investment. Across Europe and the US, cost control and maintenance of current systems are the priorities during 2003 for IT managers. Large scale new capital expenditure is still typically off the IT buyer agenda.

There is also plenty of evidence from the survey that a two speed economy is at work in Western markets; IT spend is being driven by public sector investment and the retail sector, with the public sector in Europe particularly bullish, predicting 8.5% growth in 2003. Conversely, the manufacturing and business services sectors continue to draw in their horns, with US manufacturing predicting just 2% growth.

Additionally, the study highlights trends amongst IT buyers to consolidate the number of technology suppliers that they buy from, and a desire to measure the Return On Investment achieved from new technologies implemented in their organisations. The care with which IT managers have been spending their budgets in 2002 looks set to continue on into 2003.

RoperNOP Technology interviewed 1100 business IT buyers online in November and December 2002, using comprehensive databases sourced from partners, CMP Media and CNET/Silicon Media. Data were weighted to be representative of the IT buying population in the US, the UK, Germany and France.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

• All news