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Most large companies will curb spending on technology in 2002, according to a new report by Forrester Research (Nasdaq: FORR), but a comeback is expected to begin later this year.
"We're forecasting a recovery in the tech sector to begin in 2002, with modest growth in the latter part of the year, then hitting its stride with double-digit growth in 2003," Forrester analyst Tom Pohlmann told the E-Commerce Times.
Sluggish Spending
On average, technology spending by large companies will drop 14 percent in 2002, according to the report, which polled 900 top executives at firms that each bring in more than US$500 million in revenue.
"Compared with 2001, companies are much more risk-averse when considering new technologies, opting to make do with what they have before buying more," Pohlmann said.
The report projected that spending on e-commerce technology will drop from 3.5 percent of revenue, or $41 million, in 2001 to 3 percent, or $29 million, in 2002.
"No particular companies brought down the spending. But in terms of specific industries, the retail and high-tech sectors seemed to scale back their technology purchase plans the most," Pohlmann noted.
Selective Shopping
Companies plan to keep buying necessities -- 61 percent of the largest companies said they will consider purchasing hardware, software or network services.
However, large firms are more reluctant to invest in enterprise-level technology like CRM, enterprise resource planning and procurement applications. Just 26 percent said they will consider purchasing enterprise applications in 2002, down from 58 percent in 2001, according to the report.
Companies also are less likely to seek outside help with technology. The number of firms considering technology consulting services dropped 28 percent from last year, though there is still strong demand for such services in the insurance, manufacturing and utility industries.
Improvement Ahead
Large companies still expect to see a marked increase in online commerce, however. The executives polled by Forrester estimated that their online-generated 2002 revenue made up 7.3 percent of overall corporate revenue, up from 5.7 percent in 2001, and they projected that figure will reach 20 percent in five years.
"Despite the economic downturn, companies still
believe that technology will make a huge difference in
driving business results," Pohlmann said
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