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New ChangeWave survey confirms U.S. business spending has entered a recession
By Paul Carton and Jim Woods
ChangeWave's latest corporate IT spending survey points to a negative growth rate for Q2 2008 -- and the findings confirm that U.S. business spending has already entered into a recession.
Nearly 23% of respondents reported that their company's IT spending will decrease (or there will be no spending at all) in the second quarter, three points worse than ChangeWave's previous survey, which was conducted in November 2007. Only 15% said spending will increase -- an unprecedented nine-point drop from previously.
A total of 2,013 respondents involved with IT spending in their organization participated in the February survey.
A Picture of Negative Growth
As seen in the chart below, the percentage of respondents that projected decreased IT spending for Q2 2008 is far greater than the percentage that projected an increase.
To put these findings in context, you'd have to go back to August 2001 to find the last time a ChangeWave corporate IT spending survey projected negative spending growth.
The survey found that the projected decrease is taking place in companies of all sizes, indicating that the slowdown is not an isolated phenomenon.
Green Light Versus Yellow/Red Light Spending
We also asked respondents to rate the current willingness of their company to spend money on IT products and services. Only 43% said that their company is now giving a "green light" to IT spending (i.e., spending is normal) -- a nine-point drop from the previous quarter to the lowest level seen in more than four years.
The chart above shows the combined "yellow light/red light" percentage is now higher than the "green light" percentage for the first time in more than four years.
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Current Quarter Results
In addition to future trends, we also wanted to know what's happening right now. To gauge this, we asked respondents if IT spending was on track so far in the first quarter.
Once again, the results are the worst in a ChangeWave survey in more than four years.
Only 10% of respondents said that they've spent more than planned during the first quarter -- down seven points from previously. Another 27% said that they've spent less than planned -- three points worse than previously.
In terms of specific IT segments hit hardest, storage (change in net difference score = -6) is registering the biggest Q1 slowdown. Software enterprise applications (-4), servers (-4) and security (-3) also look significantly weaker.
A Few Upbeat Findings
Despite the overall downtrend, a few areas are managing to gain ground.
Both of these areas will be the subject of upcoming ChangeWave reports. Putting such upbeat examples aside, there's no disguising that the latest survey results clearly point to a negative IT spending growth rate.
As we head toward the second quarter, the results confirm that U.S. business spending has already entered into a recession.
For a copy of the entire ChangeWave Corporate IT Spending report, please contact Darlene March, March Media Relations, (714) 514-3736.
Paul Carton is the Research Director of the ChangeWave Alliance. Jim Woods is ChangeWave's Senior Editor. The Alliance is a network of 14,000 highly-qualified business, technology and medical professionals in leading companies of select industries. The Alliance is surveyed weekly on a wide range of business and investment research and intelligence topics.
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