IT Spending Projections Rise 'Significantly'

Jun 2, 2004

CIO Update Staff

The expected 7.8% increase was the highest since 8.2% in January of 2004. In addition, the poll reported the number of respondents receiving salary increases over the past 12 months was higher than at any point in 2003. Technology spending projections also remain consistent for the fifth consecutive month.

"During May, 43.8% of our respondents said they planned to increase spending over the next 12 months on eight unique categories," says Ed Yardeni, chief investment strategist for Prudential Equity Group. "In April, it was 45.1%, the best reading since early 2001, suggesting that a slow but steady IT expansion is in progress."

IT Sectors

When asked about spending in eight specific IT categories, the average number of panelists planning to increase spending decreased to 43.8% in May (down from 45.1% in April). Those planning to decrease spending decreased to 11.9% (down from 13.2% in April).

Security software continues to be the strongest sector in the poll with roughly 57.7% of respondents planning to increase spending (a decrease from 59.9% in April) while only 2.6% plan to decrease spending (roughly flat with April).

The outlook for computer hardware spending increased slightly month-to-month. Among the panelists, 53.2% plan to spend more (up from 53.0% in April) while 13.8% plan to cut spending, (down from 16.5% of panelists in April).

The percentage of CIOs planning to increase spending on infrastructure software was 36.5% in May (down from 39.5% in April). Those planning to decrease spending fell to 9.0% in May (down from 11.2% in April).


IT compensation costs (including salaries, benefits, and bonuses excluding stock options) reportedly rose by an average of 4.1% in the 12 months ending in May (down from 4.4% in April, and up significantly from 1.9% a year ago). Six-point seven percent (6.7%) of respondents report IT professionals were hard to find and retain (up from 4.9% last month and up from 3.4% a year ago).

Internet Budgets And Business

Overall, panelists expect to generate 11.1% of their revenues from Internet activity over the next 12 months (down from 8.9% during the previous 12 months and flat from last month's levels). On average, during the next 12 months, panelists expect to purchase 20.6% of their materials, supplies and parts over the Internet (up from 16.8% over the past 12 months).

Special Question

In May's poll, panelists were asked their views on Intel's planned introduction of a 64-bit x86 extension server processor and what that would mean for their organization's roadmap to use 64-bit x86 processors. Only 1.3% of panelists said that it had a significant impact on their roadmap, while 13.7% said it would somewhat impact their roadmap. The majority of respondents, 76.1% of CIOs, reported that it had no impact on their plans for adopting 64-bit processors in their organization.

About the Poll

In the May poll, there were 315 responses with very large firms with over 5,000 employees representing 18% of the results. A broad cross-section of industries is represented, including technology services (11%), non-computer/communications related manufacturing (14%), finance (12%), state or local government (7%), health care (11%) and wholesale and retail distribution (8%).

The poll panelists are asked to answer questions on overall current and projected IT budgets on a monthly basis. Also covered are future spending plans for IT hardware, software, services, and Internet initiatives.

This article was compiled and edited by CIO Update staff. Please direct any questions regarding its content to Allen Bernard, Managing Editor.


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