Majority of US firms to increase technology budgets in 2005 - Siemens

Source: Siemens Financial Services

Reflecting an improving economic landscape and heightened levels of business confidence, many American companies now acknowledge a sustainable information technology spending recovery and are planning increased investments this year, according to a survey released today by Siemens Financial Services, Inc.

The survey of senior financial executives found that 67 percent of respondents are seeing a rebound in IT spending, with half planning to increase current levels during 2005. The recovery is being fueled largely by the need to increase productivity and efficiency, cited by 78 percent of respondents as a key motivating factor.

"As business conditions improve and the economic outlook brightens, corporate confidence is increasing and companies are seeking ways to enhance their competitive position," said SFS President and CEO Bill Zadrozny. "Companies are once again making strategic technology investments designed to boost productivity and improve business processes, a likely precursor of corporate growth and expansion."

Some of the other key findings of the survey are:
  • 67 percent of companies rank the strength of the current IT spending recovery at least a seven on a ten point scale.
  • Of the companies that increased IT equipment spending during 2004, 77 percent reported double-digit spending growth.
  • Of the companies expecting continued growth in IT equipment spending in 2005, 61 percent are expecting a double-digit increase.
  • Hardware (30 percent) and software (28 percent) comprise the largest portion of planned 2005 IT budgets.
  • Companies expect telecommunications to account for 15 percent of their IT budgets in 2005. More that a third of companies have already invested in Voice over Internet Protocol (VoIP) technology, making it an emerging area of growth.
  • 95 percent of companies believe that reinvesting in technology is necessary to avoid competitive disadvantages.
  • Companies expect equipment replacement cycles to shorten over the next five years. This will be particularly pronounced in software, an area where 73 percent of companies expect shorter replacement cycles.
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