Y2K to take 44 percent
of corporate tech budget
Company spending to avert computer breakdowns resulting from millennium bug will consume a whopping 44 percent of information technology budgets in 1999, according to a survey released today.
While corporate computer budgets are expected to stay relatively flat in 1998, the portion spent on Year 2000 fixes will climb to 29 percent from 5 percent of total spending in 1997, according to the Gartner Group.
The survey is the latest to suggest that a corporate spending
pullback has begun, one that will sap investments in new technology,
and slowing growth for many computer companies. However, there
will be tremendous growth in the software consultancy sector which
is expected to steer the Caribbean's business sector away from
the disastrous effects of the bug.
In a speech people at the opening day of Gartner's annual Symposium
in Orlando, Florida, the research firm's CEO Manny Fernandez said
that Year 2000 spending will become the No. 1 technology priority
for companies worldwide, beating out spending on nearly all other
new computer technologies combined.
"This year (1998), that number is 29 percent," Fernandez
told about 10,000 people at the opening day of Gartner's annual
Symposium in Orlando, Florida. "Our latest forecast is that
this percentage will soar to 44 percent of IT [information technology]
budgets in 1999."
The statistics are based on a survey of technology managers at
15,000 small, medium, and large companies in 87 countries. Gartner
has estimated the worldwide cost of preventing potential Year
2000 computer failures will total $300 billion to $600 billion,
with $150 billion to $225 billion of that amount to be spent by
U.S. companies alone. At least US$50 billion will be spent by
Latin American and Caribbean governments and businesses.
That's funding robbed from new technology that companies otherwise
might have installed in the coming years, says Gartner.
Projects that could be delayed or cut back include new software
to link key business operations, larger data storage networks,
new computer-based customer service phone centers and email systems,
Fernandez said.
Overall, computer systems account for an average of between 5
percent and 8 percent of corporate budgets in the companies surveyed,
depending on whether the business is an aggressive user of technology
or not, according to Gartner.
Lou Marcoccio, a Gartner analyst and Year 2000 expert, said the
number of companies initiating computer millennium fixes peaked
in January 1998. This explains the sharp jump in spending over
the past 12 months. Further spending has resulted from a realization
that the problem is not confined merely to older mainframe computers
used to run large businesses, but extends to a variety of smaller
computer hardware, software and so-called embedded systems, he
said.
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