Survey Shows Measured Rise in IT Optimism

In another signal that the tech recovery may have legs, a survey of more than 800 small, medium and large businesses shows that more than one company in four expects IT spending to increase in the next six months, a marked change from sentiment at the beginning of the year.

Six months ago, just 20% of the companies queried in a quarterly survey by market research firm Techtel expected spending to grow in the future, compared to 23% three months ago. The latest survey, conducted in early October, shows that 27.6% of the companies expect to spend more, 21.1% expect to spend less, and the remainder say spending will be flat.

"This is a more sustainable improvement in tech demand than anything we have for a year and a half," said Michael Kelly, CEO of the Emeryville, Calif., firm.

Leading the spending recovery so far are health, financial and business services, in which Techtel's survey showed that about 17% more companies expected spending to rise than expected it to fall, compared with 11.3% six months ago.

The manufacturing sector still lags but is showing improvement, Techtel found. Six months ago, 14.6% more companies expected spending to fall than to rise. Negative sentiment continued to predominate in the latest survey, but it had dropped to a net of just 4%.

Techtel's survey is somewhat more optimistic than a smaller one conducted recently by Merrill Lynch. In that survey of 75 U.S. and 25 European chief information officers, just 20% said they expected to spend more in the fourth quarter of the year (a shorter time frame than the Techtel survey).

Commenting on the 61% of IT execs who said they had underspent their budget so far this year, Merrill Lynch strategist Steven Milunovich, said, "Unfortunately, that underspending does not appear to be setting us up for a particularly strong fourth quarter, although a few will play catch-up."