Tech Spending Poll, GDP Data Confirm Slowdown

CIO Magazine released its quarterly poll of spending intentions by information technology executives.

The quarterly CIO Magazine Tech Poll shows IT spending projections in March declined with CIOs predicting IT spending increases of 5.1% over the next 12 months (vs. 5.8% in December). Spending projections in all categories declined with the exception of Data Networking Equipment which remained a top priority for the quarter.

Given recent economic data, this should not be much of a surprise. For example, the GDP data have shown a steep slowdown in spending on equipment and software:

“Our latest poll results suggest IT spending will be subdued this year, with corporate managers likely concerned about weakereconomic growth in 2007. CIOs predicting IT spending increases of 5.1% over the next 12 months, down from 8.6% a year ago, and the slowest pace since May 2005,” says Dr. Edward Yardeni, President, Yardeni Research, Inc.

The CIO Magazine Tech Poll results are used to construct the CIO Magazine Tech Future Growth Index [TFGI], which projects IT activity over the next 12 months1. Latest results show the TFGI is 1.8, down from 2.3 in December.

We have been talking about a slowdown in tech spending for some time, and the GDP data have been confirming it for a year, which actually may highlight the silver lining in this report: CIOs are often the last to know about IT spending plans, and to some extent the survey can serve as a contrary indicator. You just have to be careful to pick the right bottom.

Disclosure: author holds put options on Research in Motion (RIMM) at time of publication.