IT spending dipped “precipitously” in August after holding strong for three months, Gartner Inc. reported today in its Gartner Technology Demand Index. The drop in spending was primarily the result of large and small businesses cutting back. Mid-sized businesses’ spending stayed on track, Gartner says.
A poll drawn from Gartner’s panel of 20,000 IT decision makers showed that businesses spent at 81% of the level they had budgeted for the month. The Technology Demand Index had remained above 90 during May, June and July, meaning businesses were spending 90% of t heir budgeted IT amounts. “While medium-sized businesses continue to show strength, an IT spending recovery in 2004 will require renewed growth from large and small businesses,” Gartner said I releasing the results.
Gartner analysts said the fourth quarter continues to be the critical period. For a strong recovery to begin early in 2004, IT spending needs to be robust in the fourth quarter of 2003. "The (current period) is indicating potential market weakness among small and large enterprises, which are reluctant to spend at budgeted levels," said David Hankin, senior vice president and general manager of Gartner. "However, midsize organizations may be the economic vanguard that will stimulate spending throughout all sectors. We continue to expect that, overall, the fourth quarter will show expected gains as companies clear excess budgets to gear up for a stronger business environment in 2004. Failing this, the 2004 recovery is in jeopardy."
The Gartner Technology Demand Index is part of Gartner IT Watch. Gartner describes IT Watch as reporting results from weekly polling of the 20,000-member IT decision maker panel to produce an early warning indicator for investment professionals and vendors. Gartner says IT Watch captures short- and long-term attitudes toward investment in IT products and services, and reflects anticipated changes in spending trends because of current events and broader economic factors.
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