Cahners: Enterprise IT Spending Down 18%

According to a new report by market research firm Cahners In-Stat, business IT spending isexpected to drop this year, the first down year in over ten years.

Although small-office/home-office (SoHo) spending willexperience the greatest drop, the Cahners In-Stat Group, a subsidiary of ReedElsevier Inc., says enterprise spending will also take a dramatic hit. Spendingby companies with over 1000 employees will drop by eighteen per cent. Itestimates the average enterprise will spend $19 million this year.

The firm attributes over-spending in 2000 as the reasonfor the great drop in IT spending. Because many businesses bought too many goodsand services last year, demand for new products is slow today. In addition,Cahners says the uncertainly following the September 11 terrorist attacks havemade many companies balk at buying IT products.

Spending by mid-sized and small business will dropslightly less, according to the report. The midmarket will spend 13% less thisyear, while small businesses, defined as 5 to 99 workers, will spend 17% less.The SoHo market, defined as businesses with fewer than five employees, will seea 27% fall in spending.

Cahners says there are some bright areas in anotherwise dismal market. Outside services such as application integration andweb hosting should remain steady, as will communications and networkingservices.