Gartner Technology Demand Index Shows June IT Spending Still Below Plan

STAMFORD, Conn.--(BUSINESS WIRE)-- IT spending within all technology sectors remained below anticipated levels in June, according to the Gartner Technology Demand Index, an index included in a monthly economic indicator service launched by Gartner, Inc. (NYSE: IT and ITB).

According to a weekly poll drawn from a 20,000-member Gartner panel of IT decision makers from small, midsize and large businesses, U.S. businesses spent below their budgeted levels, recording 90 percent on the Gartner Technology Demand Index for June. A 100 percent total would mean businesses spent exactly what they had budgeted for the month.

"Continued economic weakness and uncertainty have resulted in a situation where, in general, recovery has been slow to materialize," said David Hankin, senior vice president and general manager of Gartner. "IT decision makers appear to be holding a firm line on budgets, keeping current spending below their budgeted expenditures for this quarter."

Gartner analysts said the Technology Demand Index reflects a stalled recovery, with no particular sector emerging from the pack as a leading indicator of spending direction. The networking and telecommunications sector showed the best results for the month, with spending levels reaching 93.19

Analysts said there are signs the telecom equipment segment is improving from a two-year revenue decline, while telecom services are experiencing increased mobile usage at the expense of the fixed public networking providers.

Table 1

Gartner Technology Demand Index for June 2003

Sector Spending Index

Hardware 88.03

Software 84.25

Networking and Telecommunications 93.19

IT Services 80.94

Aggregate Overall IT Spending 90.08

Note: An index of 100 would mean actual spending totaled the projected budget for the month.

Source: Gartner (July 2003)

Major software industry changes were augured in June, with Oracle's announced tender offer for PeopleSoft and PeopleSoft's merger with J.D. Edwards. Gartner surveyed 559 IT decision-makers in June to gauge what influence the announced mergers are having on IT buyers.

The survey showed 81 percent of IT decision makers said the acquisition news will not change their overall software spending plans during the next several months, while 12 percent of those surveyed said they will delay related software purchases until the situation becomes clear.

"While one might expect that PeopleSoft and J.D. Edwards would have been significantly impacted in buyers preference plans by Oracle's tender offer, we find that there was no statistically significant difference in the proportion delaying purchases among potential clients for each of the three companies: Oracle, PeopleSoft, and J.D. Edwards," Hankin said.

"Some clients reported that Oracle's bid for PeopleSoft has caused them to delay their purchase until the situation becomes clear," Hankin said. "However, we find there was no statistically significant difference in the proportion delaying purchases among potential clients for each of the three companies: Oracle, PeopleSoft, and J.D. Edwards."

The Gartner Technology Demand Index is an offering within Gartner IT Watch. Gartner IT Watch uses results from weekly polling of the 20,000-member IT decision maker panel to produce an early warning indicator for investment professionals and vendors. Gartner IT Watch captures short-and long-term attitudes toward investment in IT products and services, and reflects anticipated changes in spending trends because of current events and broader economic factors.

Analysis is provided monthly for the overall IT market and is further broken out to provide insight into current and projected spending in vertical industries. It also identifies vendors and products that will lead recoveries or play a shaping role in IT spending patterns. For more information on Gartner IT Watch, visit http://www3.gartner.com/1_researchanalysis/ITwatch.jsp

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