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CIO Confidence Levels Mixed: Report

IT execs are upbeat about current conditions but are less sure about the immediate future, a new Forrester survey says, and expect 2006 tech spending to fall short of last year's.
Forrester Research's CIO Confidence Poll survey remains positive about the current health of their industry, but less confident in the future, according to a recent study. In November and December 2005, Forrester surveyed 160 CIOs at North American companies on the health of their industries, businesses and IT budgets, as part of an ongoing confidence review.

Forrester expects IT spending in 2006 will finish slightly weaker than 2005, though the research firm predicts a tech-spending slowdown is possible in 2007. The report said "84 percent reported strong or very strong business conditions, and 74 percent have increased IT spending over 2004."

Confidence fell 11.5 points sequentially in the last quarter of 2005. The outlook for this year appears less certain than it did a few months ago. CIOs, about 84 percent, in the last quarter of 2005 viewed the business climate as strong, 84 percent, down from 86 percent in the prior.

Those who viewed their industry as very strong had dropped by nearly 25 percent. "Spending stayed aggressive, but shifted down slightly," the survey said. CIOs reported higher IT spending in 2005 compared with 2004, with 74 percent reporting at least some increase. But the percentage dropped from the third quarter in 2005. Meanwhile, 78 percent of CIOs reported spending increases.

Forrester said IT spending during 2005 had been expected to remain strong, though estimates receded slightly in the fourth quarter of 2005. Only 3 percent expected to spend less than their budget, down from 6 percent in the prior quarter, while 19 percent believed they would overspend.