The Goldman Sachs Group last week rang in the new year with a report indicating that the cautious optimism of late 2002 didn't make it through the new year.
In the investment banking firm's most recent poll of 100 CIOs, respondents said they expect IT spending in 2003 to decline 1 percent, down from the 2 percent to 3 percent growth that had earlier been predicted. The survey also showed respondents' view of long-term "normalized" spending growth dropped from a high of 7 percent over 2002 to an expected 5 percent in 2003.
The report states, "Such severe declines in sentiment coming out of budgeting season confirm the ongoing business weaknesses that we have noted at key end markets - in particular telecom, financials and manufacturing."
Goldman Sachs also found that two-thirds of respondents believe that incremental budget tightening is more likely than budget loosening in 2003. And the expected spending acceleration has been pushed out of 2003, with the majority of respondents expecting an uptick in spending no sooner than 2004.
Yet even with the projected lows in spending, CIOs surveyed indicated top spending priorities to be security, wireless LAN connectivity, Web-based application infrastructure, next-generation Windows operating systems, integration software, Gigabit Ethernet and storage networking. The top spending areas for security are intrusion detection, VPN and security management.
New spending initiatives cited in this report include portal software and handheld devices. Goldman says an increasing adoption of enterprise portals reflects the broader enterprise migration toward Web-based applications. Application server software, the basis of Web-based application, also garnered more interest from respondents.
And interest has increased in areas such as enterprise application integration (EAI), network management and supply-chain software. EAI growth came as a bit of a surprise to Goldman, but the firm says a solid November 2002 quarter from Tibco could indicate positive things for this market in 2003. Increased interest in supply-chain software is also a surprise, considering a difficult year overall for that market.
Veritas' recent purchase of application performance management software maker Precise is an example of the "attractive growth prospects" in the network and systems management market.
Storage networking components and network-attached storage top the list of storage spending wishlists. And while Goldman says storage may not reflect the "hyper-growth" pattern of earlier predictions, the technology's growth profile is strong and steady.
Server hardware continues to rank lowest among the CIOs' priorities, although Linux is getting a bit more attention than its competitor platforms Microsoft Windows NT and Unix.