Survey: Outlook for tech spending dims
Pessimism grows as managers worry about sluggish economic growth.
NEW YORK (CNNMoney.com) -- Technology spending forecasts fell in the third quarter, the latest sign that IT managers are worried about a slowing economy.
Chief information officers expect IT spending budgets to increase 6.5 percent over the next year, down from a forecast of 6.9 percent in the second quarter, according to the CIO Magazine Tech Poll.
The latest view from IT managers reinforces a long-held concern: that the slowing economy will lead to cutbacks in business spending.
"Our latest poll suggests that tech spending is likely to remain subdued over the remainder of the year because corporate managers may be concerned about weaker economic growth in 2007," said Ed Yardeni, who helped create the poll.
Spending projections have been sliding for some time - at this time last year IT managers were expecting their budgets to grow 9.3 percent over the next 12 months - as the economy has cooled.
Gross domestic product, the broadest measure of the nation's economic activity, grew 2.9 percent in the second quarter, down from a robust 5.6 percent pace of growth in the first quarter, and many economists expect the downturn in the housing sector to further pressure growth.
But some tech categories remain a spending priority for business managers. Storage is the top concern for CIOs, with 48.1 percent expecting to raise their spending on storage systems. Nearly half of the respondents - 46.9 percent - also expect to increase their budgets for computer hardware and security software.
The survey also showed that corporate managers are still hesitant to make the switch to software-as-a-service, or the delivery of business software over the Internet popularized by companies like Salesforce.com (Charts). Only about 3 percent of those polled said they're using software as a service, and almost half (46 percent) said they have no plans to move to that model.
Some 160 firms representing large, medium and small companies responded to the quarterly poll.