IDC Survey Shows Pent-Up Demand for Infrastructure Upgrades, But End-Users Remain Cautious About Spending

FRAMINGHAM, MA – SEPTEMBER 9, 2003 – North American companies are recording the first, gradual increases in overall IT spending since the end of 2000, as growth in corporate profits and pent-up demand for system upgrades and replacements begins to impact technology sales. According to a new IDC survey of more than 500 end-user organizations, however, this growth remains heavily dependent on economic confidence and is inhibited by a persistent atmosphere of caution and hesitancy. In the short term, there will be a heavy focus on infrastructure upgrades. In the longer term, a return to previous growth rates for IT spending is unlikely.

Less than one third of IT departments expect to receive the necessary funding to complete critical and strategic objectives during the next twelve months. While a majority of these companies identified economic uncertainty and pessimism as the primary inhibitor, a large proportion also pointed to a short-term outlook and the persistent mood of 'good-enough computing' in their organization as underlying factors. The biggest IT focus for the remainder of 2003 was identified as cost-cutting, narrowly ahead of infrastructure upgrades.

"It's all about the infrastructure," said Stephen Minton, director of Worldwide IT Markets at IDC. "The mood of cost-control and caution persists, but alongside a realization of the urgent need for infrastructure upgrades."Infrastructure was ranked as the number 1 concern for 2004, narrowly ahead of cost-cutting, integration and security, with PCs and servers identified as the most critical infrastructure segments in need of urgent funding. Infrastructure failure ranked only narrowly behind an improving economy as factors which would drive increased IT spending over the next year.

"The survey shows that only a small number of IT departments have been allowed to exceed their IT budgets over the past year," said Minton. "For the CIO, the difficulty of winning funds for projects which are not considered mission-critical will remain challenging. More than one third of respondents said that two things are keeping them awake at nights – the thought of losing their jobs, and the thought of more budget cuts."

To better understand current priorities and trends in IT spending, IDC surveyed more than 500 end-user organizations during July 2003. Questions relating to IT spending and budgets were presented alongside other topical questions relating to market trends and dynamics. Survey results are available in the following documents: North America End-User Survey, 3Q03: IT Spending Trends and Priorities (IDC #30013) and Executive CTA August 2003: It's All About The Infrastructure (IDC #29994).

To purchase these documents, call IDC's sales hotline at 508-988-7988 or email

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