Tech spending will continue to grow, but many economists don't see it expanding anywhere near the rates it did just a few years ago. That's in part because companies continue to squeeze a lot of value out of the technologies they have.

That doesn't mean businesses have stopped buying gear--90% of companies plan to buy PCs in the fourth quarter, according to the InformationWeek Research Priorities survey, which polls 300 IT-business executives every three months. What's happening, though, is that companies can buy less because those purchases deliver more oomph than ever, thanks to improvements in computing speed, price competition, and product performance. "Even relatively slow growth in spending leads to disproportionately large change in IT capacity in companies," says Erik Brynjolfsson, management professor at MIT's Sloan School of Management.

Though it will vary from sector to sector, the overall annual growth in IT spending will be half of what it was in the late 1990s, says Ruben Melendez, CEO of Glomark Corp., which helps buyers determine the return on their IT investments.

Why? During the boom years, companies invested heavily in enterprise systems, bandwidth, and Internet technologies, as well as year-2000 remediation. Those investments created the foundation that is the fabric of most companies' business operations today.

InformationWeek Research's Priorities survey shows that purchasing plans in some technology categories are down from the recent past. Two years ago, seven of 10 business-technology executives said their companies were set to buy enterprise-application-integration tools; this autumn's survey shows that fewer than half intend to. Likewise, the number of companies acquiring Web-development tools fell to 70% this fall from 79% two years ago.

But companies seem to be embracing some tools that were emerging technology two years ago. For instance, nearly two of three tech buyers surveyed this fall plan to acquire XML-based tools, up from just under half two years ago. As recently developed systems create more data, companies will invest more in storage technologies; 53% of respondents plan to acquire storage area networks, up from 44% two autumns ago.

Providing better protection to the systems companies have built remains a top technology-spending priority. Nearly eight of 10 executives say network-security-management software is on their fourth-quarter project list, two-thirds plan to add intrusion-detection software, and just over half plan to invest in encryption.

While they look to add technology where needed, CIOs clearly have a mandate to run more-efficient business-technology factories. Just over 80% say one of their business goals is to lower the cost of IT operations. And many are succeeding at that goal. Says economics and information-management professor Hal Varian at the University of California at Berkeley: "CIOs are getting much more for their dollars."