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By Ed Frauenheim, 25 August 2004 08:10

NEWS Company executives are feeling bullish about information technology spending, according to new research from IDC. But the analyst firm disagrees with its own findings.

An IDC survey this month of at least 400 business and technology executives in the United States found the leaders expecting IT spending growth of 12.9 per cent over the next 12 months.

But John Gantz, IDC's chief research officer, said he doubted such spending will materialise. "We don't believe that," Gantz said during a presentation on Tuesday. "But that's what they told us."

IDC is forecasting US IT spending growth of 5 per cent for this year, to $376.4bn. The research firm expects US IT spending growth next year of 6 per cent. Worldwide, IDC predicts IT spending this year will rise 5.2 per cent, to $915.1bn. It will climb another 6.3 per cent next year, according to the research firm.

Gantz on Tuesday outlined the major assumptions behind IDC's forecasts for the rest of 2004 and 2005. They include stocks stuck in the doldrums, US unemployment above 5 per cent, mild inflation and oil prices that remain high. Gantz said the oil situation is one of a capacity crunch, with notable demand from China and from sales of sport-utility vehicles in the United States. "We're in a long-term period of higher oil prices," he said.

Gantz said a rule of thumb is that for every $5 increase per barrel in oil, the world's economic output decreases by 0.1 per cent. IDC presented a chart showing that crude oil had cost less than $35 per barrel in April but had risen to more than $43 per barrel at the end of July.

IDC's finding that company executives are optimistic about IT spending echoed the results of a study released on Tuesday by technology services company Accenture.

Accenture said most business and IT executives in the United States anticipate increases in IT expenditures over the next three years. Accenture's study, which polled more than 300 general business managers and IT executives of large US-based companies, found that 55 per cent of all respondents expect their organisations to increase IT spending over the next three years, with only 10 per cent expecting their organisations to decrease IT spending.

But a sunny spending outlook could be clouded by a catastrophe such as a major terrorism incident or new disease outbreak, Gantz suggested. He said there's a "high probability of some low-probability event taking place".

Ed Frauenheim writes for CNET News.com