With IT Spending Studies, Estimates Run the Gamut

For most it buyers and vendors, making sense of the various 2003 IT spending reports has been about as easy as reading tea leaves.

Depending on which research company you ask, IT spending budgets for next year are everywhere from modestly positive to downright flat or even gloomy. As a result, it can be tricky for IT buyers to figure out what competitors are planning and whether they should budget conservatively for continued hard times or aggressively in preparation for an economic recovery.

How different are the spending estimates from various researchers? Howard Rubin, an analyst at Meta Group Inc., in Stamford, Conn., forecasts a 15 percent drop in IT spending next year, while investment banking company SG Cowen Securities Corp. is projecting a 2 to 3 percent increase in IT spending from last year.

The analysts themselves recommend that readers of their reports take the numbers with a grain of salt, while considering the methodologies used by each research company. At Meta Group, for example, Rubin said his IT spending survey is determined by asking actual IT buyers how much cash will be spent on IT. Other surveys, he said—particularly those done by financial analysts—also look at vendor sales figures and use amortization and depreciation figures, which could explain the differences in numbers.

At Cap Gemini Ernst & Young U.S. LLC, in New York, John Parkinson, chief technology officer at the consultancy, said his survey showed IT buyers in the Global 2000 will spend 6 to 7 percent less this year on technology than they did last year. The survey—which uses a more informal methodology than others—is based on a straw poll conducted by Parkinson among the CTOs and CIOs at clients served by Cap Gemini Ernst & Young.

What all analysts agree on, however, is that spending this year will be down from last year, a trend that will most likely continue next year regardless of increases in IT spending budgets.

And when it comes down to it, even IT buyers say no crystal ball is necessary to figure out whats going on.

"Weve been turning in some good quarters that astound even us, but the truth is, these are tough times," said Tim Stanley, vice president of technology at Harrahs Entertainment Inc., in Las Vegas. "I dont need a report to tell me we need to be prudent about where we spend our money."

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