IT spending; Meta: new budgets aimed at efficiency.

• Author: Marshall, Jeffrey
• Position: Information technology, META Group Inc. findings

The information technology (IT) recession has morphed into a new IT reality in which cautious technology spending has fundamentally altered how organizations are allocating their IT investments, according to the annual Worldwide IT Trends & Benchmark Report released by Meta Group Inc., a provider of IT research, advisory services and strategic consulting.

The findings reveal a lukewarm IT economy, with 2005 spending projected to increase by only 4 to 5 percent. While the figure is lower than many published reports, Meta Group analysts argue that it has far-reaching implications, as it likely represents the new "steady state" of IT.

"IT budgets are not simply declining or leveling off," said Howard Rubin, senior vice president at Meta Group. "Rather, they are changing completely. Companies are shifting from a pure cost-cut mode to a model that emphasizes agility and efficiency. They are removing fixed costs in favor of variable costs. As a result, technology spending will have a significant impact on the IT landscape with respect to vendor health and viability."

The report debunks the common myth of the relative strength of the North American IT economy. It found that 2005 Europe/Middle East/Africa (EMEA) spending is actually projected to surpass North American spending levels. Asia-Pacific is expected to experience the most growth among the regions researched, and should set a new precedent for IT efficiency. Conversely, IT spending in Latin America is expected to decrease.

Research also indicates that companies are reallocating the savings derived from cuts in infrastructure to invest in new...