Analysts: Expect strong IT spending in 2006

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The IT investment news is good! Most companies are expected to increase their IT investments this year, despite growing concerns over turmoil in the Mideast which have sent prices for commodities such as oil through the roof. Some 76 percent of companies in AMA Research’s latest Tech Trends survey state they do plan to boost spending in the area by an average of 19.5 percent. This is an increase from the 2005 report which had the increase at just under 6 percent.

The AMR report included feedback from 200 IT and business executives working for companies ranging in size from midsize to enterprise-size in the United States. AMR said this is the first time that no participating company indicated they expected their budgets to decrease. However, like the previous two years, almost 60 percent of all IT investments will be steered towards developing new revenue sources.

Of the top influences seen by companies regarding their IT spending decisions, at the top were increased competition, customer-driven issues, economic issues, and supplier driven issues, respectively.

According to the results, enterprise applications, hardware and networking are seen as the current top areas of investment. Yet, the need to upgrade infrastructure trumps these concerns. And of the enterprise applications and software seen as the most necessary, most executives expect customer management (24 percent) and performance management (23 percent) to be their most pressing needs over the coming year.

Another study from Computer Economics' study called IT Spending, Staffing, and Technology Trends also released in July expects the median growth in IT spending across all industries in the U.S. and Canada at 4.1 percent in 2006. The best news of all, is that “IT operational spending is growing not only in terms of dollars; it is growing as a percentage of revenue” the report states, with percentages averaging 2 percent in 2006, which is the highest percentage seen since 1997.

The Computer Economics report has healthcare as the second leading sector of median IT operational budget growth at 6.5 percent, following business services at 9.7 percent.