Corporate IT Spending Down, Pointing to U.S. Recession

Corporate spending on IT is down in the first quarter, with 27 percent of companies reporting that they have spent less than planned in Q1 and 23 percent saying they will reduce or halt IT spending in Q2 - figures that raise concerns of a U.S. recession, according to a ChangeWave study, writes MarketingCharts.

Only 15 percent of respondents project an increase in spending, down nine points from the last survey, in Nov. ‘07, according to the study. More companies are projecting a decrease, or no spending altogether, than they have in more than six years: See graph.

Those results were consistent across companies of different sizes (based on number of employees) - see chart.

IT segments spending for which declined most from Nov. ‘07 to Feb. ‘08:

• Storage (down 6 points)
• Servers (down 4)
• Software Enterprise Applications (down 4)
• Security (down 3)

PCs were the only category where spending increased (up 1 point), while spending on networking and outsourced IT services such as systems integration and implementation did not change.

Willingness to spend on IT products and services is low - see graph:

• 43 percent say their companies are giving a “green light” (conditions are normal), a 9-point drop.
• 53 percent rate willingness at “yellow light/red light” (cautionary), an 11-point increase.

The forecast for the rest of 2008 is neutral: 19 percent expect growth in their IT budget, 20 percent predict a drop, and 51 percent believe it will remain the same, according to the ChangeWave survey.

“This is pretty non-ambiguous stuff here,” Paul Carton, director of research for ChangeWave, said of the results. “But it’s not the end of the world, either…. We’re having a tough quarter right now. Spending is down. That doesn’t mean there aren’t pockets where things are doing OK.”

“We find in our world of measuring change, the consumer spending is two-thirds and corporate spending is one-third.”

About the survey: Between Feb. 11 and Feb. 15, ChangeWave collected responses from 2,013 people - all of whom are involved with IT spending in their organizations. Of the respondents, most worked for US companies, and 7 percent worked for Canadian firms; a small number were from other nations.