April 11, By Caron Carlson

Forrester Research put out an updated report predicting even higher annual growth in IT spending--8.4 percent--than predicted in January. The rosier forecast, by Forrester's Andrew Bartels, is based in part on a larger-than-expected increase in spending on communications gear, particularly among enterprises and small and mid-sized businesses.

The greatest boost for IT sales this year, according to Bartels, will be in software and computer equipment. Operating systems and applications will drive software growth, while storage gear, PCs and peripherals will drive hardware growth. Bartels predicts that the sectors most responsible for the growth are manufacturing, financial services, utilities and health care.

This all bodes well for IT operations in the coming year, but it doesn't necessarily mean the pressure is lifting for CIOs. The hardware and software sales predictions indicate that enterprises are ready to begin performing needed IT upgrades and perhaps resume stalled projects. An upswing in communications-related purchases might suggest, however, that increased spending is tied directly to cost savings. For example, unified communications and teleconferencing solutions promise savings in travel.

The predictions also suggest that the bulk of the organizations leading the upturn might have regulatory motivations--both carrots and sticks. Many healthcare companies are racing to take advantage of the electronic health records incentives established in last year's economic stimulus legislation, while financial services companies remain subject to a barrage of regulation, and Congress is considering more in the wake of the mortgage industry meltdown.

Does Forrester's forecast reflect the spending plans at your organization? Are you resuming projects and upgrades that had been put on the back burner? If you've got a larger budget this year than last, is it tied to cost-savings in other areas? _________________________________________________________________________________