November 17, 2003 4:38 PM PST

Another survey sees IT spending on rebound

BOSTON--Data published Monday indicates that spending on information technology products and services continues to regain momentum in the United States.

Boston-based AMR released its third-quarter IT spending report at its Fall Executive Conference. According to the company's latest estimates, corporate IT budgets increased by an average of 4.3 percent during the third quarter of 2003, compared with growth of 3.4 percent for the second quarter of this year. AMR reported a meager 0.2 percent gain in IT budgeting in the third quarter of 2002.

Speaking to conference attendees, AMR Chief Executive Tony Friscia said the positive growth stands as proof that the market for IT is rebounding, but he tempered any optimism with a warning that rapid gains are not likely to occur in the near future.

"We're not going back where we were several years ago--this is the recovery," Friscia said. "The real new economy is the widespread movement of technology throughout the old economy."

Friscia said that companies in vertical industries such as financial services and manufacturing would continue to invest greater amounts of capital into technology that can deliver measurable productivity gains in relatively short periods. In the past, companies invested more heavily in technologies that offered new features, Friscia said, but now businesses are more interested in products that promise to help business processes.

"Product innovation is now taking a backseat to process innovation," he said.

Among the companies Friscia expected to benefit from this trend are enterprise software makers. AMR estimated that the enterprise software sector will grow by 7 percent this year.

AMR reported that nearly two-thirds of the chief information officers interviewed for the study were planning to invest in infrastructure-related projects, with 25 percent looking to spend money on related software and 21 percent hoping to expand investment in hardware. One year ago, only 12 percent of AMR's poll respondents said they were planning to increase infrastructure spending.

Another leading driver of IT spending is an increasing number of regulatory demands being placed on businesses by the federal government.

The research also pointed to growth in demand for the networking and telecommunications sector. Some 24 percent of the study's respondents ranked the area as a top priority for investment over the next twelve months.

The spending survey is based on phone interviews AMR conducts with 200 U.S.-based companies with 1,000 or more employees. The latest poll was taken during October 2003.

 

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