Wednesday, December 10, 2008

Tech-Spending Growth Is Seen Slowing

Technology spending will grow at its lowest rate in six years in 2009, a research firm said, as businesses shift their buying habits in response to the economic downturn. Businesses and other organizations in the U.S. will spend $573 billion on computer software, hardware and services next year, just 1.6% more than they spent in 2008, according to new data out from Forrester Research Inc. In contrast, U.S. tech spending grew 4.1% in 2008 and 7% in 2007. Earlier this year, Forrester predicted U.S. tech spending would grow 6.1% in 2009.

The results are based on several factors, including real gross domestic product growth and how technology is valued by businesses. Forrester also doesn't anticipate that tech spending will contract the way it did when the tech bubble burst in 2001. Back then, businesses overinvested in technology. In this downturn, information-technology departments may not cut as much as other departments.

Forrester predicts that software revenue will only grow 3.4% in 2009, with much of that coming from support fees for previous purchases. Software companies say that they've already seen a shift in the way businesses buy tech products. Historically, businesses would buy more software and hardware than they needed at the time of the purchase in anticipation of future growth.
Source: WSJ

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