News

Gartner: Larger IT Budgets Expected in 2006

• By Jamison Cush
• October 12, 2005

U.S. organizations will open their wallets to increase IT spending next year, growing 5.5 percent, according to a preliminary results from a Gartner survey.

The research firm expects a renewed focus on application development and integration, while security and storage spending will level off in 2006. Middleware and mobile devices will also become major purchasing priorities. These results are based on responses from more than 1,500 U.S. IT managers regarding their 2006 financial plans.

However, Gartner expects the job market to remain challenging. Staff budgets will see only a small increase, while budgets for IT contractors will decrease.

“In terms of staffing priorities, respondents said they would devote more of their IT staff budgets to project and program management, IT administration, and system and network management in 2006,” says Barbara Gomolski, a Gartner analyst.

SMBs plan the biggest IT budget increase at 7 percent, while larger organizations plan only a 2.4-percent increase.

"On the surface, these results paint an optimistic picture of long-awaited IT spending recovery, but the increases involved are relatively modest," Gomolski says. "Many industries will see revenue growth outpace IT budget increases in 2006. As a result, although absolute dollars spent on IT will increase in 2006, IT spending as a percentage of revenue will actually decline in some organizations."

The service sector will see the largest year-over-year budget growth, increasing 11 percent in 2006. No other industry expects double-digit IT budget growth next year. Financial services organizations plan to increase their 2006 IT budgets by 3.4 percent.