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Outlook 2004

Business-technology executives surveyed for InformationWeek's annual Outlook study expressed the highest level of optimism in three years about their companies' revenue prospects, but they're moving cautiously.

In an old Hollywood movie, a wise nomad has some advice for the film's hero, who's traveling through the desert: "Trust Allah, but don't forget to tie up your camel."

Business leaders preparing for 2004 appear to be exercising the same blend of faith and caution when it comes to the economy, growth prospects, and budgets. Business-technology executives surveyed for InformationWeek's annual Outlook study expressed the highest level of optimism in three years about their companies' revenue prospects, but they're moving cautiously, with no plans to significantly increase IT purchasing levels or appreciably boost technology staffs.

The 400 companies surveyed plan to devote, on average, 8.3% of annual revenue to IT expenditures, down slightly from last year's 8.6%. That could still bring an increase in overall spending, since 82% expect their companies' sales to increase this year. Nearly half the respondents say they expect IT spending to exceed 2003 levels, a positive shift from a year ago, when 40% anticipated increased spending.

On average, survey participants say 30% of 2004 IT budgets will be dedicated to salaries and benefits, with 22% going to hardware and technology purchases, 20% to applications, and 11% to consulting services and outsourcing. Top-of-mind initiatives for the new year include optimizing business processes, improving customer service, and organizing or using customer data. Anticipated technology priorities include purchasing PCs, enhancing network security, and upgrading network-management software.

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