IT budgets loosened (just a little) in 2003 -Gartner

Worldwide IT spending by business is forecast to reach $2.1 trillion in 2003, a 4.9 per cent increase over 2002, according to Gartner Dataquest.

IT spending is likely to increase this in all 14 vertical business segments (finance, retail etc.) tracked by the analyst firm. Last year, IT spending was reduced in three business segments, while in 2001, five vericals reduced their investment in IT.

According to Gartner, government and healthcare will show the strongest growth in 2003 and 2004. But even then, it forecasts single-digit growth only.

For federal government "Key issues that are increasing technology investments will include Homeland Security, outsourcing, and agency modernization projects," notes Rishi Sood, principal analyst for Gartner Dataquest's IT Services group.

Despite the increase in federal government spending, state and local government will spend less in IT because of increased spending restrictions imposed by budget deficits, he adds.

In healthcare, Gartner Dataquest says the leading drivers of IT investment include patient safety along with the rising cost of delivering and managing healthcare, rapidly changing patient demographics and demands and the push for process standardization and automation. Regulatory requirements, such as the Health Insurance Portability and Accountability Act (HIPAA) of 1996, will also push up it spending in healthcare in the US.

Gartner Dataquest notes that more health organisations are considering outsourcing, but adds the budget constraints will (as with local government) limit capital expenditure on IT.

The largest global vertical markets - financial services, manufacturing, government and communications - will account for two thirds (67 per cent) of worldwide business IT spending in 2003. Financial services and manufacturing, will see only modest growth rates in IT spending in 2003 and 2004 though there pay be a picks up in IT investment by banks next year.

More information is available in the Gartner Dataquest's IT Forecasts: Spending Recovery in Most Vertical Markets," which examines the outlook for worldwide IT spending in vertical markets through to 2006. The report can be purchased on Gartner's</ a> Web site. ®