Outlook for 2008 IT Spending
The ability to fund increases in IT spending levels next year will depend primarily on the overall health of the economy. Therefore, a review of current economic conditions is helpful in understanding the outlook for 2008.
In the third quarter of 2007, U.S. GDP growth increased at a healthy 3.9% clip, according to advance estimates from the U.S. Department of Commerce. This follows an increase of 3.8% in the second quarter. These two quarters demonstrate a rebound from the weak 0.6% growth rate logged in the first quarter. Because of the economic rebound in the second and third quarters, it is not surprising that the vast majority of organizations report actual IT spending this year at or above budgeted levels.
The outlook for IT spending in 2008, however, depends on management expectations for economic growth in the coming year. Here, there are already signs of trouble:
Although these problems have not yet noticeably affected business investment (of which IT spending is a part), they could be precursors to slowing growth, if not outright recession, in 2008.
CE’s survey data indicates IT executives have already scaled back their expectations for IT spending increases in 2008. If economic conditions do worsen, CE expects that median IT spending increases in 2008 will be flat compared to 2007. CE does not yet, however, see widespread IT spending cuts in 2008.