IT Spending Projections Soar in July According to CIO Magazine Tech Poll

FRAMINGHAM, MA – August 1, 2005 – Continuing a trend of recent fluctuations, the CIO Magazine Tech Poll™ results soared to the highest projected rate of information technology (IT) spending since February 2001. Respondents to the July Poll predict IT spending will grow 10.1%, up from 6.0% in June and 8.1% a year ago. Most spending categories increased month over month, with Data Networking Equipment, Computer Hardware, Infrastructure Software and Security Software posting large improvements changes. Only telecom equipment bucked the trend, showing a slight decrease. The IT labor market shows continued strength with only one-in-five (20%) panelists reporting IT labor as hard to find.

"While July’s results are encouraging," says Gary Beach, Group Publisher of CXO Media, the company that publishes IDG’s CIO magazine. "The recent swings in spending projections lead me to believe it is essential to watch the IT market over the next several months to determine if tech spending is really back."

"That's more like it," says Dr. Ed Yardeni, Chief Investment Strategist for Oak Associates. "After more than five years of fizzling, tech may be about to take off. At least, that is my take on the fireworks display in the July poll."

"In this month's poll, CIOs are slightly more positive on storage and computer hardware spending, with both the largest and the smallest companies predicting increases," says Chris Whitmore, Director, IT Hardware Research for Deutsche Bank Securities. "These results are consistent with what we hear from IT companies who say the US and small-to-medium businesses continue to be strong. However, we remain concerned that weakness in Europe and Japan, and the rising dollar will pressure overall results this year."

The CIO Magazine Tech Poll provides technology and business executives, economists, and policymakers with a tool to gauge technology growth trends to assess the impact on the overall economy. Poll panelists answer questions on overall current and projected IT budgets on a monthly basis. Future spending plans for IT hardware, software, services and Internet initiatives are also covered. The results of the July poll, conducted from July 7-14, are detailed below.


The CIO Magazine Tech Poll results are used to construct the CIO Magazine Tech Future Growth Index (TFGI), which projects IT activity over the next 12 months.1 In July, the TFGI was 4.1, up from 2.2 in June (Attached below are Tables 1 through 3, providing historical data and selected charts).


The CIO Magazine Tech Poll panel projects IT budgets will grow by 10.1% during the next 12 months, versus 6.0% for June’s poll. CIOs report IT budgets increased by an average of 9.0% during the last 12 months, up from 6.5% last month.


When asked about spending on eight specific IT categories, the average number of panelists who plan to increase spending during the next 12 months was 42.9% in July, up from 39.1% in June. Panelists who plan to decrease spending fell to 13.0%, from 14.2% last month. Security software remains the strongest sector in the poll, with 58.3% of respondents predicting increases in spending, up from 52.5% last month. Storage remains second, with 52.5% of respondents planning to increase spending in this category, up from 49.5% in the June Poll.

Computer Hardware: July results indicate that 48.3% of panelists plan to increase spending on computer hardware (up from 41.8% in June), while 14.0% intend to decrease spending (versus 24.2% in June).

Compensation Costs and Labor Market Conditions: IT compensation costs (including salaries, benefits, and bonuses excluding stock options) increased an average of 6.8% in the 12 months ending July, up from 5.3% in June. Of the respondents, 12.8% report IT professionals are plentiful, while 20.0% reports IT professionals are hard to find.


Internet Revenues: Overall, panelists expect to generate 10.5% of their revenue from Internet activity (B2B2C) during the next 12 months, compared to 9.1% during the previous 12 months.

Internet Purchases: On average, during the next 12 months, panelists expect to purchase 23.8% of their materials, supplies and parts over the Internet, up from 21.0% during the past 12 months.


Q) What events have the greatest impact on your IT spending?

A) The largest number of respondents, (44.4%) cited company earnings as having the greatest impact, while 17.4% answered market/business conditions. A lesser amount (15.2%) cited regulatory/compliance issues, while 13.5% cited external geopolitical and economic events.

Q) Does your organization have plans to implement a voice over IP (VOIP) strategy in the next 12 months?

A) Most respondents, (40.6%) report no plans at this time to install VOIP. Of the remaining respondents, 28.9% already installed VOIP, while 23.9% plan to implement a VOIP system within the next 12 months. The rest (6.7%) are unsure.


The CIO Magazine Tech Poll was created by CIO magazine in August 2000 in association with leading economist Dr. Ed Yardeni, Chief Investment Strategist, Oak Associates. The poll is an accurate indicator of technology spending trends. The latest poll opened on Thursday, July 7th, and closed on Thursday, July 14th. An invitation to respond to the poll was distributed via e-mail to a panel of chief information officers and randomly selected CIO readers who match the job function criteria “CIO.”

Demographics: In the July poll, there were 181 responses with very large firms (over 5,000 employees) representing almost 20% of the results. A broad cross-section of industries are represented, including finance (12%), health care (11%), education (11%), technology services (10%), state or local government (9%) and non-computer/communications related manufacturing (8%).

Previous poll results can be found at

1 The TFGI is calculated by multiplying the projected growth rate of future IT budgets by the average percentage of respondents saying they plan to increase spending on eight unique categories: computer hardware, data networking equipment, telecom equipment, storage systems, outsourced IT services, infrastructure software, and eBusiness software.

2 Averages exclude responses over 100%.

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