Gartner Technology Demand Index Shows IT Spending Begins to Strengthen Heading Into Second Half of 2003
Gartner Analysts Say Current Spending Uptick Is an Important First Step in Fueling a Turnaround in IT Demand
STAMFORD, Conn., August 18, 2003 — Early signs exist that IT spending will strengthen in the second half of 2003, which provides the necessary first steps for a turnaround in IT spending for 2004, according to the Gartner Technology Demand Index, an index included in a monthly economic indicator service launched by Gartner, Inc. (NYSE: IT and ITB).
According to a weekly poll drawn from a 20,000-member Gartner panel of IT decision makers from small, midsize and large businesses, U.S. businesses spent below their budgeted levels, recording a score of 95.1 on the Gartner Technology Demand Index for July (an index value of 100 would mean businesses spent exactly what they had budgeted for the month). After hovering around 80 in March and April, the Index has remained above 90 for the past three months, flirting with the key 100 level. This indicates that IT demand is slowly returning to budgeted spending levels.
"The underlying data still reflects a conservative market that is focused on cost control. The overall positive trend is offset by occasional negative data points, which we anticipate will continue to decline in frequency through the end of the year," said David Hankin, senior vice president and general manager of Gartner. "Based on the trends we see, we are optimistic that spending will return to or exceed budgeted levels in the fourth quarter of this year."
In July, software spending went above the budgeted parameters (see Table 1), as the software segment scored 107.3 on the Technology Demand Index. One application area that has shown the strongest current demand is the design and engineering segment.
"The strong current demand in the design and engineering area is primarily due to the growing interest in new standards such as J2EE (Java 2, Enterprise Edition), .NET and Web services, which require new tools for building applications," Hankin said.
Table 1
Gartner Technology Demand Index for July 2003
Sector
Spending Index
Hardware
88.8
Software
107.3
Networking and Telecommunications
89.1
IT Services
95.5
Aggregate Overall IT Spending
95.1
Note: An index of 100 would mean actual spending totaled the projected budget for the month.
Source: Gartner (August 2003)
The Gartner Technology Demand Index measures IT decision makers' purchase preferences across more than 400 vendors by sector and product. Vendors ranked high by this measure stand to gain the most in demand in 2004 relative to 2003. Large vendors with strong brands, such as Cisco Systems, Dell, IBM and Microsoft, dominated the vendor rankings (see Table 2).
Table 2
Gartner Vendor Demand Index Top 20
Vendor
Sector, Product
2Q03 Ranking
3Q03 Ranking (thru July)
Dell
Hardware, Servers
19
1
Microsoft
Software, Systems Applications
12
2
Microsoft
IT Services, Software Maintenance and Support
1
3
Microsoft
Software, Back Office Software
11
4
Microsoft
Software, Collaborative and Personal
6
5
Microsoft
Software, Application Development, Integration, and Deployment Tools
4
6
Dell
Networking and Telecom, Enterprise Equipment
33
7
Cisco Systems
Networking and Telecom, Infrastructure Equipment
3
8
Dell
Hardware, Desktops, and Workstations
16
9
Dell
Hardware, Notebooks and Laptops
20
10
IBM
IT Services, Application Development and Integration Services
32
11
Dell
Hardware, Input/Output Hardware
70
12
Cisco Systems
IT Services, Hardware Maintenance and Support
10
13
IBM
IT Services, Software Maintenance and Support
25
14
IBM
IT Services, Consulting Services
35
15
IBM
Software, Systems Applications
64
16
Hewlett-Packard
IT Services, Software Maintenance and Support
74
17
Northrop Grumman
IT Services, Application Development and Integration Services
2
18
IBM
IT Services, IT Management
39
19
AT&T Wireless
Networking and Telecom, Mobile Services
72
20
Note: 3Q03 rankings include survey results from only the first month of the third quarter.
Source: Gartner (August 2003)
The Gartner Technology Demand Index is an offering within Gartner IT Watch. Gartner IT Watch uses results from weekly polling of the 20,000-member IT decision maker panel to produce an early warning indicator for investment professionals and vendors. Gartner IT Watch captures short- and long-term attitudes toward investment in IT products and services, and reflects anticipated changes in spending trends because of current events and broader economic factors.
Analysis is provided monthly for the overall IT market and is further broken out to provide insight into current and projected spending in vertical industries. It also identifies vendors and products that will lead recoveries or play a shaping role in IT spending patterns. For more information on Gartner IT Watch, e-mail ITWatch@gartner.com or visit www.gartner.com/1_researchanalysis/ITwatch.jsp.
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