In the sixth installment of its IT Spending Survey series, released this week, Goldman Sachs Group Inc. says overall IT spending levels remain highly depressed, with no signs of upturn.
On the positive side, the spending outlook seems more stable than it appeared in earlier studies, "with signs of a bottoming in sentiment," the financial analyst firm reports. For companies in the mood to buy IT products, prices remain favorable.
Future IT budget increases are anticipated to be weaker than what Goldman Sachs expected. Based on discussions with IT managers earlier in the year, the firm thought 2003 IT budgets would be 6 percent to 7 percent higher than they were in 2002, the firm says. More recent discussions led Goldman Sachs to believe 3 percent to 5 percent increases were likely. Now, the September issue of the spending survey reports that, on average, companies expect their IT budgets to grow only about 2 percent to 3 percent next year.
"Our first survey data on 2003 spending plans are below our already low expectations," Goldman Sachs reports. Its survey panel is made up of 100 IT managers from very large multinational companies.
Meanwhile, the ability for companies to command favorable pricing terms from their IT vendors is increasing, say 68 percent of Goldman Sachs survey respondents. Only 5 percent say their pricing power is decreasing, and 24 percent say it is unchanged.
"Vendor pricing woes have not abated," Goldman Sachs reports.
Stated purchasing priorities are in line with those reported in its last couple of surveys, Goldman Sachs says. The six highest ranking IT priorities, in descending order, are: information security; cost cutting; application integration; disaster recovery and business continuance; new software application deployment or development; and systems and storage consolidation.
Security, networking gear and storage products are among the areas that Goldman Sachs respondents expect to spend more money on than they did in the past. According to the survey, the seven areas that will see the greatest increase in spending over the next 12 months, in descending order, are: security software; security hardware; data networking equipment such as switches and routers; wireless LAN equipment; storage software; Windows 2000/XP desktop operating system software; and midrange storage arrays.
Goldman Sachs' findings appear to be in line with those of other financial analyst firms.
SG Cowen's 2002 Information Technology User Survey, released last week, names similar high-priority IT projects: security; disaster recovery; upgrading PCs; server consolidation; storage consolidation; storage area networks; wireless LANs; and applications integration.
SG Cowen's 700 respondents expect their 2003 IT budgets to be 3.4 percent higher than their 2002 budgets, on average.