IT Spending Shows Modest Growth

Increases pale in comparison to dot-com era.

Companies are spending more on information technology than in previous years, but IT investments pale in comparison to the dot-com boom of the late 1990s. A survey of 21,000 companies across 37 different industries shows spending was expected to increase 6% by the end of 2006, according to Alinean Inc., an Orlando, Fla.-based provider of return-on-investment and total-cost-of-ownership solutions. Alinean projects 2007 growth will be about the same, with a 5% to 6% increase expected.

That's nowhere near the double-digit annual growth the industry experienced during the dot-com era, the firm reports. "Our research proves that overall IT spending is growing steadily but perhaps more conservatively than was expected," notes Tom Pisello, CEO and founder of Alinean. "This continues the trend toward more mature IT spending governance and the requirement to prove and improve the return from every investment."

While overall company spending on IT has lagged in relation to revenue growth, investments in innovative IT initiatives have grown 43% since 2003, according to the study.

An uncertain future for the overall economy will hamper further IT spending increases until the risks of a slowdown disappear, Alinean reports.

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