June 8, 2005

According to Forrester Research's most recent CIO Confidence Poll, as a whole, IT and B2B spending will soften slightly next year, as higher oil and gas prices, a still-weakening dollar, a rising trade deficit and general uneasiness in capital markets are fostering a rather negative outlook from the average CIO.

That's no reflection on the rest of 2005, for which spending and confidence alike remain strong. In 2006, though, only 65 percent of CIOs expect to increase IT spending. Compare that to the 77 percent of CIOs who increased IT spending in 2005.

IT sentiment correlates to CIOs' perception of the overall business climate in their industries. For Q2, 2005, this figure was lower than it has been since the first quarter of 2004.

There is one possibility about which Forrester did not speculate. It may be the case that a decline in IT spending simply represents a drop in the cost of certain e-business technologies. With applications, servers, and other IT spending components succumbing to price pressure, it may no longer be accurate to reflect an enterprise's actual stake in IT simply by what it spends.

Take a simple example, that of Worldspan. The company recently moved from licensed to hosted customer relationship management (CRM), which means it is spending less money but has the same reliance on its e-business system.

As such, going forward, we may have to dispense with easy correlations between IT spending and IT importance, as it were. With the technology involved steadily becoming more powerful and less expensive, it is now possible to be more IT-oriented while spending less.

Source: Line 56