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February 2003

Worldwide spending on IT products and services is expected to increase 4 percent in 2003, predicts the Aberdeen Group, a technology market analysis firm. That compares to growth of 1 percent last year.

Aberdeen forecasts long-term growth in the 4-to 5-percent range. The firm expects that in the United States,IT purchases will increase 3.6 percent in 2003, with annual increases of between 5 and 6 percent from 2004 to 2006. Businesses now make their IT purchase decisions based on their topline revenues, capital spending levels and on the nation’s economic health, the company says. As a result, industry growth will be more closely linked to broad business trends.

Aberdeen’s forecasts are based on its World IT Spending Calculator, which uses a proprietary methodology that combines findings from IT buyer surveys, macroeconomic data, technology supplier financial information and Aberdeen’s analysis of business trends and new technology introductions.

For supply chain applications, Aberdeen analysts expect that an increasing number of enterprises will create a common infrastructure on which they can integrate business processes across divisions and externally with suppliers. They also expect “hybrid ” supply chain vendors—firms that offer integration and consulting services as well as applications software—to outperform those that are solely focused on applications.

Peter S. Kastner, Aberdeen’s executive vice president and chief of research, wrote in the company’s electronic news letter, “Simply put, U.S. CEOs still have a tight grip on corporate IT spending, believing that prudence in the face of a possible war, oil disruption, and a weak economy dictate a minimum of capital expenditures and a ruthless focus on cutting IT costs. The rest of the world, which is in a much better psychological state of mind, does not have a big enough growth engine to pull the United States out of its IT slump.” He expects sales to start picking up slowly later this year.

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