Analyst forecasts IT spending recovery in 2003

IT spending will bounce back next year, according to analyst firm IDC.

Speaking at its European IT Forum in Monaco, John Gantz, IDC's chief research officer, claimed: "The rebound of the IT market is coming."

Despite the tough current market conditions the lowest point has been reached, and there will be modest growth over the rest of 2002, the analyst claimed.

Next year would see "a return to normal growth patterns, but not aggressive growth", Gantz said. IDC's worst-case scenario predicted at least four per cent growth in European IT spending in 2003.

Gantz said the slowdown in IT spending was part of the industry's usual business cycle, where new technology creates "a new paradigm", followed by a slump in the market.

But, he said, following the slowdown exploitation of new technology would begin "with technology and business innovations and changing market share".

The new market will see architectural changes in everything from servers and storage to telecom infrastructures, IT services, software and e-business, Gantz added.

Technology users should form partnerships with systems integrators and cut costs by outsourcing all but non-strategic areas of IT, according to IDC.

Outsourcing models would evolve to focus on managed services and utility computing models.

The internet, business integration, mobile, security and globalisation will be driving forces of the rebound. "Mobile and wireless is set to be the driving force on the computing landscape for the next decade," said Gantz. Wireless LAN equipment sales will grow by 22 per cent a year until 2006.

IDC predicted there would be 20 million European broadband home users by the end of next year, with "transaction-intense" websites growing five-fold in the next four years to 10 million in 2006.

But Gantz warned that investments in security are being outpaced by the value of transactions they are protecting.

No longer a "minor tactical function", security had to become a "major strategic investment", he said.

Although there had been 1,000 per cent growth worldwide since 1999, security spending had yet to double on 1999 levels and would benefit from a higher profile, Gantz said.

Mukesh Gupta, managing director of specialist security distributor EUR92plus, suggested firms are recognising the value of security investment.

"It is not possible to be too secure, so it is not possible to overinvest in security. Fortunately most enterprises have now learnt that it is not enough to be reactive to the last incident. They must be proactive in their approach and stay ahead of the latest threats," he said.