Tech Spending Increases

One new indicator of corporate spending on information technology shows a surprising 6 percent rise in the second quarter, and not the 3 percent slippage that the researchers had expected.

The study, by Maven Wave Partners, also noted a 9.1 percent increase in spending on the IT work force, which it saw as the driver of the 6 percent overall tech spending number.

Maven Wave said it had anticipated the smaller 3 percent rise in Q2 because a Q1 surge of 14 percent had led them to believe that companies would be cutting back purchases to absorb what they had brought in earlier in the year.

Good Hardware Sales

More unexpected strength was seen in the better-than-anticipated hardware sales, especially, with actual results outperforming the projection by 5.3 percent. These positives, it said, were more than enough to offset weaker-than-expected software sales results. Software sales in Q2 fell short of projections by 4.9 percent.

The tech results were based on last week's release of data from the Bureau of Economic Analysis.

In its interpretation of the data, Maven Wave said that the IT spending squeeze brought on by the beginning of the financial crisis in 2008 appeared to have ended as 2010 wound down.

The Chicago-based consulting firm, which concentrates on technology delivery and outsourcing of services, created two separate indices, one showing aggregate spending on IT, and the other looking at corporate earnings in relation to spending on the IT work force.

'Slight Tap on the Brakes'

Looking ahead, the data suggested that hardware and software vendors should see increased activity, as companies start to invest in productivity, and seek earnings benefits from IT.

"Now that actual numbers for the 2Q 2011 are in," the report said, "it's clear that despite our conservative estimates, and despite a slight tap on the brakes in first quarter for software spending, IT spending growth overall continued at a blistering pace."

Its study focusing on Q1 was titled "IT Spending Catches Fire." It said that spending, after being crushed in the recession and the credit crisis, was showing strength because companies needed to make up for their delays in keeping up with technology.

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