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1/5/2007
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Technology Outlook: IT Priorities For 2007

Data analysis, virtualization, regulation top the to-do list for technology managers this year.

As technology managers take their marks for the sprint into the new year, competing budget, labor market, and project-list pressures weigh heavy on their minds. But those poised to exploit existing resources, while dealing with the handicaps of security, regulation, and overhead, might well have a running start.

According to InformationWeek Research's Outlook For 2007 survey of 300 business technology managers, fielded in November, IT spending is forecast to rise, but cost-cutting is still top of mind. That may help explain why new technologies that let companies consolidate computer systems and get a better return on their assets are soaring in popularity. Business technology managers put PC upgrades at the top of their project lists this year but say one reason for those refreshments--Microsoft's new Windows Vista operating system--has been overhyped. And while companies count a failure to staff qualified technologists among last year's biggest gaffes, most don't plan to hire new IT managers in '07.

Overall, though, according to the survey, managers are optimistic about prospects for the coming year and bullish on IT spending plans. Nearly half (46%) say their companies' IT spending will rise this year, another 39% don't expect their IT budgets to change, while just 9% plan a decrease. Companies we polled expect to spend, on average, 8.7% of revenue this year on IT, up a bit from 8.2% last year and the highest level reported in our annual Outlook survey since 2002, when companies said they'd spend more than 9% of revenue on information technology.

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That uptick goes along with a confident outlook on sales growth. Fifty-five percent of respondents say they expect their companies' revenue to grow faster in '07 than last year. Still, 20% don't expect revenue growth to change, and another fifth see a slowdown in growth. And that's a long way from the boom years: Looking back on our 2001 Outlook survey, 72% of companies foresaw an increase in IT spending, and 78% expected revenue growth to accelerate.

BULLISH ON GROWTH

chart: Bullish on Growth
More than half of IT Managers say their companies will grow faster in 2007 than they did last year. Not bad, but still far from pre-bust levels at the outset of 2001, when nearly 80% said that. Not surprisingly, the positive outlook corresponds with an increase in IT spending, which has inched up over the last three years to nearly 9%, on average, of companies' revenues.

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