Amidst lingering concern about the overall state of the U.S. economy, CIOs are predicting a slowdown in IT spending in 2007, according to a new survey from analyst firm Merrill Lynch.
The survey of 75 U.S. and 25 European CIOs reveals that users expect 5.2 percent spending growth in 2006 and 4.8 percent in 2007. American execs predict only 4.4 percent spending growth over the coming 12 months, compared to their more bullish international counterparts who expect 6.1 percent growth.
Users and analysts identified uncertainty in the U.S. economic climate as a key factor in the spending slowdown. "The end of 2005 was slow, then it picked up in the spring, but now it has slowed down again," explains Dan Tanner, a member of the Storage Networking User Group of New England (SNUGNE) and founder of consulting firm ProgresSmart.
Tanner feels that a number of factors are contributing to the atmosphere of uncertainty. These include oil prices, the war in Iraq, low consumer confidence, and the lack of a clear front-runner likely to win either the Democratic or Republican party presidential nominations. "When the financial markets and big companies are paralyzed by uncertainty you get a spending slowdown," he explains.
Even John Thompson, CEO of Symantec, admitted that users are worried during the firm's analyst day this week. (See Symantec Sets Out Roadmap.) "There are macro-economic issues that many of these large companies are concerned about," he said, in response to a question from an analyst. But, the exec added, "The IT environment in 2006 compared to 2005 is quite stable."
