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Less Than Half Of Managers Like What They See Coming For IT Budgets

InformationWeek's IT Confidence Index is down 14% from a year ago, driven mostly by concerns about IT budgets in the near future.
Business-technology managers are much more optimistic about their employers' prospects for the next three months than they were a year ago, but less than half feel good about their company's upcoming IT budget plans. Those are part of the findings that left InformationWeek's IT Confidence Index, while up about 6% from six months ago, at a level still 14% lower than March 2004, according to InformationWeek Research.

The IT Confidence Index is InformationWeek Research's assessment of business-technology managers' outlook for the broad economy and IT in particular, based on surveys with 300 business-technology managers. It asks managers to assess prospects for the overall economy, and for their industries, companies, and IT budgets today and in the next three months.

While the March 2005 IT Confidence rating of 1,421 (based on an index ranging from 0 to 2,000) was down from a year ago, that March 2004 mark of 1,655 was the highest since InformationWeek Research began charting the index in March 2001. The index reached a low of 757 in March 2003.

Business-technology managers appear to hold their greatest reservations about their companies' IT budgets in the near term. Looking at their company's IT budgets for the next three months, just 45% are positive, 40% neutral, and 15% are negative. A year ago, just 7% were negative. When looking at IT spending plans for the second quarter, 41% say they expect it to rise compared to first-quarter spending, while 47% expect it to remain the same. Twelve percent expect a decrease.

Respondents are most upbeat about their own companies' business prospects for the next three months. Nearly seven out of 10 managers say those business prospects look positive, compared to only 47% who felt that way last March. Twenty-three percent are neutral about those prospects for the next three months, compared with 46% who felt that way last March. Eight percent say they have a negative outlook, compared to 7% last March.

Managers' attitudes haven't changed much about the overall economy. Sixty-four percent of business-tech managers feel positive about the current U.S. economy, nearly the same as a year ago, and the percentage that feel neutral stayed at 29%. However, when looking ahead to the next three months, respondents' outlooks dimmed slightly: 51% were positive, compared with 60% last March.

Business-technology strategies that focus on cost-cutting and streamlining are a main theme for 54% of the respondents. A third say the focus is on generating new revenue; 13% say the emphasis is about equal.

Most respondents are also keeping IT staff levels stable--25% are increasing head count.