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Tech Spending Gets Bleaker

May 13, 2008


The Wall Street Journal.com
By Ben Worthen

Better-than-expected quarterly results by some tech companies have some people (okay, us) asking whether tech spending has bottomed out. The answer is no, according to two new surveys of information-technology leaders that will be released today. In fact, it looks like there's still a ways to go.

CDW, which sells tech products, surveys about 1,000 IT leaders every other month. In its previous survey, conducted in early February, a majority of small businesses (1 to 99 employees) said they would hold steady or cut back their tech spending. The majority of mid-size companies (100 to 999 employees) and large companies (1,000-plus employees) planned to increase spending.

In CDW's most recent survey, the downturn has moved up the food chain: Forty-seven percent of mid-sized companies now plan to keep budgets flat or cut their tech spending. (In contrast, 65% of large companies still plan to increase their budgets.) Seventy-two percent of mid-sized businesses expect to stop spending on new hardware or only make minor investments, and 68% will stop spending on new software or will only make minor investments.

It would be easier to dismiss the CDW findings if a survey from ChangeWave Research didn't reveal the same thing. According to ChangeWave, only 12% of the nearly 2,000 IT leaders it surveyed plan to increase their software purchasing over the next 90 days, down from 16% in January and 22% in April 2007. Meanwhile, 25% of IT leaders say they'll spend less. That's up from 22% in January and just 10% in April 2007. ChangeWave did find one bright spot: IT leaders plan to buy more software from VMWare and Citrix, which make "virtualization" that makes tech equipment run more efficiently.

The Wall Street Journal.com