Gartner Says Corporate IT Spending In Europe Remains Cautious, But on Track to Begin Rebound in Second Half of 2003
New Survey Shows Majority of European CIOs anticipate flat or slight increase in budgets in 2003
Egham, UK, 16 October 2002 — Gartner today said corporate IT spending in Europe is expected to show stronger growth in 2003. Following the year of contraction in 2001, 2002 saw only 1.7 percent growth in Western Europe for all IT technology spending. In 2003 this figure more than triples to 5.4 percent. Software and IT services will see most significant growth in 2003 and 2004, while hardware spending continues to remain dead-flat, with no percentage increase expected next year.

Speaking before its annual Symposium in Cannes, Gartner also released preliminary findings from a survey of CIOs across Europe. This found that 78.4 percent of European CIOs are expecting IT budgets to stay the same or increase in 2003, compared with 21.4 percent of CIOs expecting budgets to decrease.

Table 1:
Title European IT Spending Forecast by Technology Sector (in Millions $US)
Western Europe 2000 2001 2002 2003
Hardware 92,842 85,117 81,991 82,008
Software 23,648 23,070 23,605 25,111
IT Services 136,668 144,615 148,005 158,477
Telecom 319,485 321,940 330,913 350,222
All IT 572,643 574,743 584,515 615,818
Source: Gartner Dataquest (September 2002)

"The most important issue in 2003 is to change how budgets are spent. The reality is that businesses will still be operating with budgets at the same level as in 2000. While business priorities are still on cutting costs, IT departments must find a way to divert focus from pure cost-cutting to continued cost-optimisation, and to make investments that deliver business value from IT," said Peter Sondergaard, Head of European Research at Gartner.

The CIO survey showed that the three areas considered most important by CIOs right now are:
  • Reducing the total cost of IT
  • Demonstrating the business value of technology
  • Providing leadership and guidance to the board of management
Gartner said the most immediate method of demonstrating business value for technology is by investing in the consolidation of existing IT infrastructure. Analysts are advising businesses to make a radical transformation to a Real-Time business model, where time becomes the key metric; time to market, time to react, time to deliver - time to realise the benefits from investments in technology made over the last decade.

"The opportunity of The Real-Time Enterprise is that the more places you look for serious time-savings, the more obvious they are. Elapsed time is one of the few truly scarce resources in an increasingly virtualised and globalised business world," says Mark Raskino, one of the leading analysts presenting at Symposium ITxpo in Cannes. "If you focus on going faster, things often get cheaper and you nearly always improve customer relationships"

European IT spending intentions by country

The survey revealed that IT spending levels remain uneven across European countries. The UK, Ireland and Italy are the bright spots where spending growth is expected to be the most significant. Germany is expected to experience a continued decrease in IT spending in 2003

Table 2:
2003 IT Spending Intentions by European Country
Enterprise budget change expectations % of Respondents
Benelux Scandinavia France Germany UK & Ireland Italy Others Total
Increase by more than 10% 19.2 5.1 4.4 4.5 8.2 16.0 5.0 9.6
Increase by 3 - 10% 5.8 17.9 20.0 13.6 29.5 30.0 40.0 21.2
Not change (-3% to +3%) 55.8 53.8 64.4 54.5 39.3 38.0 30.0 48.9
Decrease by 3 - 10% 5.8 10.3 6.7 15.9 14.8 14.0 20.0 11.9
Decrease more than 10% 13.5 12.8 4.4 11.4 8.2 2.0 5.0 8.4
Total 100 100 100 100 100 100 100 100
Source: Gartner EXP (October 2002)

European vertical market spending breakdown

Based on the budget expectations of the CIOs surveyed, the Public and Financial Services sectors are at the upper end of spending expectations growth for 2003. The Communications and Utilities sectors come in at the low end of the scale, forecasting spending to remain flat.

Table 3:
European IT Spending Expectations by Vertical Industry Sector
Enterprise budget change expectations % of Respondents
Commun ications Govern ment, Educ ation & Health Utilities Financial Services Manufac turing Retail & Whole sale Others Total
Increase by more than 10% 7.0 10.6 12.2 12.2 12.2 9.3 8.3 10.1
Increase by 3 - 10% 16.3 25.5 14.6 26.5 14.9 20.9 25.0 20.2
Not change (-3% to +3%) 53.5 44.7 46.3 42.9 52.7 55.8 58.3 48.2
Decrease by 3 - 10% 14.0 12.8 19.5 10.2 8.1 7.0 8.3 12.2
Decrease more than 10% 9.3 6.4 7.3 8.2 12.2 7.0   9.2
Source: Gartner EXP (October 2002)

Gartner will elaborate on how to become a Real-Time Enterprise at its Symposium in Cannes, France 4-7 November 2002.

If you would like to discuss Gartner's research further, please contact:

Laurence Goasduff on +44 1784 26 7195, laurence.goasduff@gartner.co or
Ray Pinto on +33 67 489 0794, ray.pinto@augustone.com

Gartner Symposium/ITxpo is a global event run in Australia, Japan, the US and Europe. It is the IT industry's largest and most strategic conference, providing business leaders with a look today at the future of IT. For more than 10,000 IT professionals from the world's leading enterprises, Gartner Symposium/ITxpo are key components of their annual planning efforts, and a place to gain insights into how their organisations can use technology to address business challenges and improve operational efficiency.

About Gartner
Gartner, Inc. is a research and advisory firm that helps more than 10,500 clients understand technology and drive business growth. Gartner's businesses consist of Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has 4,000 associates, including 1,200 research analysts and consultants, in more than 90 locations worldwide. Fiscal 2001 revenue totaled $963 million. For more information, visit www.gartner.com.