IDC Expects 6% IT Growth; AMR Finds ERP Budgets Jump 12.3% in 2007

IT buyers expect spending to grow 7.5% in the next 12 months, while Wall Street analysts forecast even slightly higher growth in vendor revenues, according to IDC FutureScan. U.S. corporate profit growth is expected to fall from 19% in 2006 to 4% in 2007, according to the economists polled by Consensus Economics, Inc., last month. 

IDC's historical research shows that the tightest economic correlation to IT spending growth is corporate profit growth. IDC forecasts for U.S. IT spending over the next 12 months come at just over 6%. A 1.5% lower growth takes $7 billion out of the U.S. IT market in 2007, says IDC.

According to a survey published in September, routine infrastructure upgrades have diminished as a primary focus for IT departments (to below 30% of respondents), while implementing new applications, upgrades to existing enterprise applications, new Web sites, and new initiatives around security and compliance have are now a priority for more than 50% of respondents. These new initiatives could propel IT spending growth even if the economy goes south.

Separately, AMR Research released the “Enterprise Resource Planning Spending Report, 2006-2007,” which found U.S. companies will increase their ERP budgets by 12.3% in 2007.

The survey found that globalization and lean manufacturing are the two most important business issues companies plan to address with ERP investments. 43% of respondents aim to have a single global ERP system within three years—compared with only 26% today.

SAP and Oracle will maintain their foothold in the ERP space. 55% of respondents in the process of making ERP system selections said SAP was on the list of vendors they were considering, while 43% of respondents said Oracle was on their list.

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