Gartner: IT Demand UP

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 (GTDI), an index included in a monthly economic indicator service launched by the research firm. The GTDI 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. 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 GTDI 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, according to David Hankin, senior vice president and general manager of Gartner. "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," Hankin said in a statement. "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." Large vendors with strong brands, such as Cisco Systems, Dell, IBM and Microsoft, dominated the vendor rankings, according to Hankin. In July software spending went above the budgeted parameters, as the software segment scored 107.3 on the GTDI. 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, .NET, and Web services, which require new tools for building applications," Hankin says. "There is definitely a trend toward rearchitecting." Hankin could not specify if CRM vendors would be key drivers of the potential turnaround, but noted that the spending increases are widespread.