Outlook brightens a bit for 2010 IT spending

Over at Computer Economics, we've just release the findings from our special November survey of IT decision-makers regarding their IT spending and staffing plans for 2010. See the six year trend chart above, with our 2010 projection.

Although the 2% projected rise for 2010 in IT spending at the median of the sample is surely not a barn-burner, it's a welcome improvement from the dismal results for this year, when IT executives at the beginning of the year expected budgets to be flat. As it turns out, that was certainly optimistic, according to our survey.

From the media alert:

After a year of budget cuts, layoffs, and delayed projects, IT executives are looking forward to 2010 as a period of stabilization and rebuilding. According to the Computer Economics fourth-quarter outlook survey, the typical IT organization plans to raise its IT spending on operations by 2.0% in the coming year.

The in-depth survey of 139 U.S. and Canadian IT organizations shows that more than half anticipate increasing IT spending in the year ahead, with the median budget increase projected at 2.0%. The survey indicates budget cutting and layoffs are in the past for most organizations, although hiring and capital spending will continue to be restrained through at least the first half.

As one might expect, the outlook for 2010 appears upbeat only in comparison to an anxiety-filled 2009. The projected 2% rise is operational spending lags behind the 2.5% rise in 2005, during the recovery in IT spending after the previous recession.

The full report, Outlook Brightens for 2010 IT Spending, also provides detail on what specific actions--both positive and negative--IT leaders have been taking in the past three months to increase or cut IT spending levels. Interestingly, while there are plenty of cost-cutting actions still taking place, there are some positive trends as well. For example, over half of our respondents report that they have refreshed/upgraded computer hardware or started a major new project in the past three months. This is a vast improvement over the results of our survey a year ago, when few organizations were taking such actions.

Outlook for enterprise software buyers
Where does this leave buyers of ERP and other types of enterprise software? Although there are signs of an uptick in spending levels, it is still too early for this to be affecting software vendor financial performance. In other words, vendors are likely to still be hungry for new business. So if you are shopping for software, it's still a buyer's market.

In addition, there are signs in our survey that buyers are still negotiating hard on existing vendor contracts. About half of our respondents indicate they have renegotiated a vendor contract in the past three months. Keep in mind, this means all sorts of IT contracts, not just for software. The increased attention on the value (or lack thereof) of vendor maintenance contracts is likely to continue, regardless of whether the IT spending climate improves.

More information

• The full report: Outlook for IT Spending and Staffing in 2010
• The research byte: Outlook Brightens for 2010 IT Spending
• The media alert: Forecast for 2010: IT Operational Budgets to Rise 2%