IT market bottoms out
The global IT market moved in parallel with the overall economy, and industry analysts also lowered their forecasts over the course of the year. The reluctance to invest in IT, which emerged in 2002, continued into 2003 and SAP assumes that, as they had done in 2002, many companies cut their IT budgets during the year, postponed investments, and lowered the average volume of the IT investments that they did implement.

Industry analysts had varying opinions on the growth of the IT industry but there was a general tendency toward restraint in their forecasts for 2003. This restraint was inspired primarily by developments in Europe and Japan. International Data Corporation (IDC) analysts revised their figures downward: While in April 2003 they expected worldwide IT spending to grow 2.3% in 2003, they adjusted this figure to just 1% in July 2003. Forrester Research also lowered its growth estimate from 1.9% to 1.3% in the middle of 2003.

According to a survey by AMR Research of 200 IT decision-makers, IT spending rose again in the second half of the year in the United States. In the third quarter, for example, IT spending was up 4.3% over the previous year. IT decisionmakers in the United States responded skeptically in a Merrill Lynch survey in the third quarter of 2003. Survey respondents indicated that spending on IT had stabilized in 2003 but would not increase noticeably in the short term.

Based on IT spending in the first six months of 2003, IDC estimated growth of 8.6% for 2003 in the Asia-Pacific region, excluding Japan. IDC predicted that Japanese IT investment would decline 1%. IDC also reduced its forecast for Western Europe during the course of the year. In April, it had estimated that IT spending in Western Europe would grow 2% in 2003, but by July it predicted less than 1% growth for the year. The European Information Technology Observatory (EITO) forecast that revenue would fall 0.7% in 2003, and the German Association for Information Technology, Telecommunications and New Media (BITKOM) estimated zero growth for Germany in 2003.

Over the course of the year, there were more and more indicators of hesitant recovery in the IT industry. After three years of restrained purchasing, for the time being, companies’ investment logjams peaked in 2003. According to analysts at Gartner, IT investment finally bottomed out in 2003. Gartner assumes growth will be stronger in 2004.