IDC’s FutureScan: Buyer Expectations for IT Spending Growth Hit Double Digits

FRAMINGHAM, Mass., March 3, 2006 – Even though the economic picture is not any better this month than last, IDC’s FutureScan for March found that IT buyers and executives have raised their expectations for IT spending over the next twelve months by more than 3% for the second month in a row.

“The respondents in this month’s poll were quite bullish,” says John Gantz, IDC’s Chief Research Officer. “The dynamic is that fewer and fewer companies are expecting cutbacks. That raises the average.”

The actual Buyer Intent indicator was 1117, up from last month’s 1078 and 1047 the month before that.

“Unfortunately,” says Gantz, “we don’t see a corresponding euphoria in the macroeconomic picture. The economic recovery seems to have gone as far as it’s going to go, with $200 trillion GDP growth and profit expectations lower than those for 2006. And vendor revenue forecasts are still in mid-single digits. Our own forecast for U.S. IT spending growth in the next twelve months is just under 6%.”

This month there is a special gap between CIO and line of business executives, with the latter expecting growth 6% higher than the former. “Some of this may be statistical aberrations in the survey,” notes Gantz, “but in general, business executives tend to be more optimistic out IT spending than CIOs. We have other research that shows that a much higher percentage of business executives believe their companies should invest more aggressively in IT than CIO’s do.”

Gantz reiterated that any single measure of expected IT spending is insufficient for making a real forecast. IDC bases its forecast on thousands of inputs beyond customer sentiment, from IT supplier capacity and technology breakthroughs to channel and pricing dynamics, demographics, regulatory change, and myriad other forces on the market.

FutureScan is a set of market metrics that measure supply and demand in the IT industry based on leading indicators and customer surveys. Values reflect expectations of future growth, with an index value of 1000 indicating zero growth and each additional 10 points representing roughly 1% of expected growth or contraction.

For March, as mentioned, Buyer Intent, which reflects market demand for IT products and services over the next 12 months, jumped to 1117. The Market Indicators number, which combines input from economic and IT industry revenue forecasts, fell from 1057 to 1041.

FutureScan results for March and prior months can be viewed at www.idc.com/futurescan.