IT spending appears to have stabilised when viewed at a macro level
Almost three quarters (71%) of 411 senior influencers and decision makers indicated a level of stability in their IT spending, with budgets for 2004 being either the same as 2003 or minimally adjusted year on year. Following the promising financial results of many of the larger IT suppliers in the second half of 2003 and first half of 2004, this suggests that market recovery is well underway.

Yet the high level view hides some important dynamics
It would be nice to think that corporates are 'waking up' from the economic downturn and elevating their spending to a new sustained level from that point onwards. What's actually happening is that companies are allocating funding to clearing the more pressing projects, upgrades, etc that were deferred during the economic decline, but are then adjusting spending down again once the situation is fully under control.

A recovery wave of spending is rolling across the corporate sector
Over 80% of organisations could relate to the concept of a recovery peak in spending on hardware, etc, with 27% saying their peak has come and gone, 6% currently experiencing a peak and the remainder anticipating a peak at some point in the future. Only 19% of organisations said that they did not expect spending to peak in this way. We can thus visualise a wave of recovery spending rolling across the corporate sector.

The implications of the recovery wave dynamic are significant for IT vendors
Exceptional spending behaviour often represents a potential switching point for customers so the arrival of the recovery wave at a particular organisation represents a dangerous time for incumbent suppliers and an opportunity for challengers. IT suppliers must also realise that that recovery spending will at some point have played out and should not assume that the macro level recovery is sustainable based purely on its current foundation.

Stimuli for investment other than economic recovery will drive the market forwards
Whilst the macro indicators continue to look positive, IT vendors and investors in the IT sector must not become complacent. It is as important as ever to consider other stimuli for investment that will trigger future waves of IT spending activity. As we look to the horizon, we can already see some of these approaching - mobile technology, advanced workforce collaboration solutions, service oriented architectures, grid computing, etc. In the meantime, the market is becoming even less forgiving of players who do not take account of their customers' needs and deliver the right solutions in the right way at the right price.