Users see bouyant IT spend, analyst predicts slowdown

IT professionals are optimistic about an increase in expenditure in IT budgets next year, although Gartner predicts a drop to 9.7 per cent from a steady 12 per cent growth for the past two years.

Rolf Jester, regional director IT services market for the Asia-Pacific region, said companies are now ready to get on with projects such as e-business, following two years preoccupied with the GST and Y2K.

Philip Nesci, CIO for Orica Australia, agrees: "For the year 2000, a third of our budget went on running the standard operating system on desktops, laptops and e-mail, 25 per cent on maintaining our SAP system and the rest on major ventures."

"Next year, we expect operating costs to decrease with slightly more funds spent on major projects."

Yet IT departments around Australia may be left wanting as only 13 per cent of Australian companies spend about 10 per cent on information technology as a percentage of revenue, with 16 per cent dedicating less than one per cent of funds.

According to a survey of CIOs from earlier this year, Jester said about one third of Australian companies rate in the 1 to 2 per cent range.

Companies topping the scale are not information IT companies, he said but companies in the information business. "They are in finance and the media, industries where IT is essential to their business."

Jester said hardware, software and network spending will remain the same next year. "IT services will have the biggest growth [next year]. We forecast a 20 per cent growth, which will be sustained until 2004. IT services spend equalled hardware spend this year, but it will overtake next year," Jester said.

He explained this growth is being driven by what used to be hardware and software expenses being diverted to outsourcing.

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