According to Datamonitor, the fact that economic growth is weaker in the European markets surveyed (GDP growth averaged 1.9 percent in 2005 across the U.K., France, Germany, Italy, Spain, Benelux and the Nordics) is clearly influencing enterprises' IT expenditure.

'A weaker economic environment causes uncertainty, can potentially delay investments in IT, and makes enterprises more hesitant to adopt the latest technologies,' says Tim Gower, lead analyst within Datamonitor's Technology Trends Service, and author of the report. 'However, with stronger economic growth forecast in 2006, this is likely to reduce the degree of caution in IT budget setting in Western Europe, making the enterprise environment marginally less challenging for technology vendors.'

Datamonitor's survey findings also indicate that spending on hardware (34 percent) and software (29 percent) dominates IT managers' budgets. Although IT departments clearly allocate proportions of their budgets to IT services, communications and consulting, these areas are significantly smaller in comparison. Despite enterprise IT spending relating to the broad area of services attracting significant attention, the reality is that the majority of enterprises' external IT spending still remains product focused.