Gartner: IT Spending Growth Forecasts Slashed Down to 2.8% in 2007

Gartner says that IT spending at larger organizations with more than $1 billion in revenue will  only increase by 2.8% in 2007. Earlier, based on 2006 first half data, Gartner had forecast that IT spending to grow 6% in 2007. 

Gartner research shows wide variation in the IT spending growth by industry in 2007:

  • The most significant difference in IT spending growth will be in the Media industry, up to nearly 7% from 4% in 2006. 
  • Retail and healthcare sectors are also projected to show over 5% growth in IT Spending
  • Insurance, utilities, and government IT spending is forecast to grow below 2% in 2007. 
  • The consumer products industry will see the biggest 6% decline in IT spending in 2007, compared to 8% increase in 2006.

Here is the full Gartner release on 2007 IT Spending Growth Forecasts is below:

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Gartner Consulting's Worldwide IT Benchmarking Group Says Large Organizations Revise IT Spending Forecasts to 2.8% Growth for 2007

STAMFORD, Conn., December 14, 2006 Organizations with more than $1 billion in revenue have reforecast their IT spending increase for 2007 to 2.8 percent, according to a new Gartner Consulting Worldwide IT Benchmark Report. These spending projections are down from research collected by Gartner during the first half of 2006. At that time, IT spending for 2007 was forecast to grow at 6 percent.

“A number of factors have combined to force enterprises to lower their IT spending forecasts from the first half of 2006,” said Jed Rubin, director, Gartner Consulting. “Looking back at the distribution of spending in 2006, enterprises spent more to support core business operations. This includes spending to support increasingly complex infrastructure and applications requirements, rising energy costs, regulatory requirements and other non-discretionary spending to keep the business running. This increased ‘run the business’ spending has consumed budget resources that were originally earmarked for more strategic and transformational investment. IT leaders are now planning to optimize their spending in these areas in the year to come.” 

According to the research, growth and transformationremain the top priorities for enterprises in 2007, but any new investments need to be funded by a significant reduction in existing ‘run-the-business’ spending. To support these priorities, IT organizations will subsequently need to reduce their ‘run the business’ budgets by nearly five percent in 2007. 

The new 2007 version of the Gartner Consulting Worldwide IT Benchmark Service and the Worldwide IT Benchmark report includes five volumes of comprehensive IT spending and performance data across 20 industries. The report highlights comprehensive IT spending plans of more than 1,500 companies with more than $1 billion in revenue, combined with historical spending and performance data on more than 10,000 companies worldwide. This allows companies to look at key cost and performance indicators by IT domain to gauge and manage organizational effectiveness and performance optimization. 

The research shows that IT spending forecasts differ by industry. In 2007, the most significant difference in IT spending growth will be in the Media industry, up to nearly 7 percent from 4 percent in 2006 (see table 1). The consumer products industry will see the biggest decline in IT spending in 2007, as spending is expected to decline by nearly 6 percent, down from an 8 percent increase in 2006.

More information on the survey can be obtained by listening to the Worldwide IT Benchmark Service New Trends & Findings for 2007 teleconference: Strategic Performance Management and Measurement:http://www.gartner.com/teleconferences/asset_161183_75.jsp 

Table 1

Industry

IT Spend Change 2006 vs 2007

Consumer Products

-5.6%

Food & Beverage Processing

-0.4%

Insurance

0.6%

Government

1.3%

Utilities

1.5%

Electronics

2.1%

Metals & Natural Resources

2.2%

Professional Services

2.5%

Education

2.7%

Telecommunications

2.8%

Manufacturing

2.8%

Energy

3.0%

Banking & Financial Services

3.2%

Information Technology

3.6%

Transportation

3.6%

Construction & Engineering

3.8%

Retail

5.0%

Hospitality & Travel

5.1%

Chemicals

5.4%

Health Care

5.6%

Pharmaceuticals & Med. Products

6.4%

Media

6.9%

Database Average

2.8%

Note: Represents 807 organizations with greater than $1 billion annual revenue, representing $130BN US in IT Spending. Source: Gartner Benchmarking (December 2006)

About the Worldwide IT Benchmark Research
Gartner's Worldwide IT Benchmark Service is a real-time, comprehensive data resource designed to provide key cost and performance indicators by IT domain and focused high-level comparisons of companies. Gartner's Worldwide IT Benchmark Service surveys companies from more than 30 countries in more than 20 industry sectors. Please click here for more information on Worldwide IT Benchmark Research. 


Contact:
Carina Swedemyr
Gartner
+46 8 624 6324
carina.swedemyr@gartner.com


About Gartner:
Gartner, Inc. (NYSE: IT) delivers the technology-related insight necessary for its clients to make the right decisions, every day. Gartner serves 10,000 organizations, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company consists of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 3,700 associates, including 1,200 research analysts and consultants in 75 countries worldwide. For more information, visit www.gartner.com.

 

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