Global IT spending will increase by about five per cent in 2005, fuelled by rising energy costs and the pursuit of productivity gains to offset competition from the emerging economies of India, China and Brazil.
According to analyst Gartner, firms are increasingly turning to IT investment to maximise effectiveness and deliver against profit expectations.
Peter Sondergaard, global head of research at Gartner, said: "[Companies] face greater uncertainty in anticipating world events, and rapid changes in markets and competition."
He added that wireless connectivity and consumer demand for products such as gaming machines, plasma screens and video technology continues to outpace business demand.
Virtualisation technology and real-time infrastructure, which enhances data collection, will also bring efficiency gains, he said.
Elsa Opitz, senior analyst EMEA at analyst IDC, predicted that although spending did not recover quite as much as hoped this year, next year will again show a slight increase.
"This year we are looking at about four per cent growth in IT spending," she said.
"This will pick up slightly next year, but over the next five years we see things levelling off at about five to six per cent. In western Europe the IT market is very mature, so investments are more targeted and not so many enterprise projects are being undertaken."
Fausto Amoroso, vice-president of marketing at Omnetica, agreed that businesses are still cautious.
But he added: "There are pockets where customers are not too worried about spending. Customers are very concerned about security, for example, and some are not even making return on investment calculations on it. There is also growth in IP telephony, IP communications, convergence and mobility."
Sondergaard said: "The biggest challenge for IT management is dealing with all the fluidity. We have to get better at dealing with uncertainty. We have to support that 'sense-and-response' cycle that underpins the real-time enterprise."
Infrastructure provider says international sales now make up 51 per cent of its revenue
Suzanne Chappell of TMS plans sailing venture after selling Oxfordshire-based TMS to acquisitive Chess
Withdrawal of credit insurance by some providers a 'reflection' of current challenge facing IT sector, according to MD Steve Soper
SMART's UK managing director joins Lenovo to boost SMB business