Corporate Canada’s spending plans signal economic recovery: Survey

Overall IT spending intentions appear healthier and poised for recovery, according to a recent survey from Canaccord Capital in partnership with Computing Canada. In 2004, the survey indicates IT budgets will increase five per cent over 2003.

Canaccord and Computing Canada polled

185 senior IT executives regarding their spending intentions. Of those, 65 per cent were vice-president level or higher, many at the chief technology office or chief information officer level. A total of 75 respondents have budgets of more than $1 million.

Among the survey’s highlights:

• In 2004, price is the top consideration for vendor selection, followed by quality of support and implementation risk.

• Regulatory concerns, such as Sarbanes-Oxley, are supporting spending on enterprise applications – 42 per cent are spending more on enterprise resource planning, business intelligence and content management. But adoption of supply chain management and customer relationship management software is flat.

• Enterprises are going wireless. Fifty-seven per cent of respondents named wireless LANs and 64 per cent wireless e-mail as priorities for 2004.

• Forty-three per cent of respondents indicated plans for increasing investment in PCs in 2004, with priority given to Dell and IBM. PCs showed improved spending over 2003, reflecting the fact that many PCs are at end-of-life and due for an upgrade.

• Enterprise software vendors prioritized for IT spending in 2004 include Microsoft, Oracle, SAP and PeopleSoft.

Our survey showed a marked increase in overall IT budgets in 2004 relative to 2003, with specific areas targeted, indicating an improving outlook for certain categories and technology vendors through the rest of 2004.

Fifty-three per cent of respondents indicated they intend to increase IT budgets over 2003 levels by between three and five per cent. Surprisingly, 22 per cent of respondents indicated IT budgets will increase more than

10 per cent. The survey results show an improvement in IT investment from 2003, when IT budgets were generally increasing by one to three per cent.

A large number of respondents (79 per cent) indicated a substantial reprioritization of IT spending in 2004 towards projects that support revenue-generation over those that save costs.

This represents a significant shift from 2003, when the focus was oriented towards saving.

While 28 per cent of respondents said they would maintain their current IT spending levels, in general, survey respondents conveyed a more confident view of the economy in their plans.

One in five respondents plans to decrease budgets in 2004, reflecting users’ demand for technology that reduces IT cost. For 2005, respondents showed still-solid, but weaker spending increases than in 2004, with 44 per cent expecting to increase spending by less than 10 per cent.

More than one-third of respondents indicated all top projects are expected to get funding. In the previous year, they said they expected only the top few projects to be approved.

Respondents also said spending priorities in 2004 would be distributed between new initiatives (26 per cent), initiatives already underway (23 per cent) and routine infrastructure upgrades (21 per cent) with the remainder to be divided between hardware and software upgrades.

Security, application integration, Web services, database and content management and e-commerce are top priorities for 2004. Software areas slated for the largest decrease in spending include application development and deployment, desktop applications and ERP/CRM.

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Jim Love, Chief Content Officer, IT World Canada

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