IT's purse strings likely to loosen in 2004

IT managers who reacted quickly to demands for cost-cutting over the past three years could see a payback in the form of discretionary spending increases next year.

But spending plans for 2004 will vary by industry with IT managers who have proven their value to the business being among the lucky ones to see increases in the coming year, according to Meta Group's Asia Pacific research director Kevin McIsaac.

"I believe there will be a 4 to 5 per cent increase in budgets, but this is in line with increases in the rest of the world," McIsaac said.

"On the other hand, we have clients who have doubled their IT budget. This is because managers have fulfilled expectations because they are able to articulate their business strategy and the value and contribution of IT to the business."

McIsaac also believes that several businesses may get an increase in IT budgets due to sheer necessity.

"There are those companies that have delayed spending for so long that they can’t hold back a major overhaul," he said.

"This could include replacement of old desktops, overhauls for those that have stayed on ageing legacy platforms, and those who are using operating systems that are being terminated, leaving with them with no alternative but to spend. And companies will have to spend to migrate."

South Australian Department of Treasury and Finance corporate services general manager, Rick Persse, said that while 2004 will be another tight year, the upside is that spending will not be cut.

"We still have to spend in certain areas. We will be looking at security, a huge issue for any IT shop at the moment, as well as management issues and methodologies, storage area networks, extending the life of our desktops, and simply trying to stretch the economic life of our assets," Persse said. There are signs of a recovery but this may not be immediately evident in IT budgets for some time, he added.

Media speculation about a "free-for-all in spending" isn't likely, he said,

Hewlett-Packard information management manager, Kerry Holling, said spending in 2004 will focus on customer management tools, mobility solutions for employees and the supply chain.

(With Thomas Hoffman.)

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