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IT spending set to rise 7 percent, firm predicts

North American firms will likely boost spending on information technology by about 7 percent annually in the 2005-2008 period, a market research firm said Monday.

The growth rate is only slightly higher than expected overall economic expansion, according to the Forrester Research report. "This finding is consistent with the cyclical nature of IT spending, where periods of digestion and refinement follow periods of heavy technology investment," Forrester said.

Forrester said company executives who were surveyed planned to increase 2005 IT budgets at a similar growth rate, an average of 6.4 percent.

"Overall, IT optimism is up quarter over quarter, with the number of CIOs [chief information officers] citing a very strong business climate tripling," Forrester said.

However, Forrester said it sees no big surge in spending for new technology, with only modest spurts for replacement of personal computers and other items.

"Forrester estimates that the US is halfway through the current cycle of technology digestion, which started in 2001," the research firm said.

"While the next four years will remain relatively quiet in terms of major technology innovations and surges in new investments, the foundation for the next big wave of transforming technologies is taking shape."

Forrester said it sees growth in computer hardware spending peaking in 2005 at 14 percent and then leveling off, in part because of lower costs of computers and increased use of Linux and open-source software.
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